AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 1 |
– |
DESCRIPTION OF BUSINESS AND GENERAL |
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A. |
Description
Of Business |
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American
Israeli Paper Mills Limited and its subsidiaries (hereafter – the Company) are
engaged in the production and sale of paper packaging, in paper recycling activities and
in the marketing of office supplies. The Company also has holdings in associated
companies that are engaged in the productions and sale of paper and paper products
including the handling of solid waste (the Company and its investee companies – hereafter
–the Group). Most of the Group’s sales are made on the local (Israeli) market.
For segment information, see note 8. |
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|
|
|
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The Company |
– |
American Israeli Paper Mills Limited. |
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|
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The Group |
– |
the Company and its Subsidiaries. |
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|
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Subsidiaries |
– |
companies in which the Company control,(as defined by IAS 27) directly or indirectly, and whose financial statements are fully consolidated with those of the Company. |
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|
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Affiliated Companies |
– |
companies in which the group has significant influence, and the group investments in them, directly or indirectly are included in the financial statements using the equity method. |
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|
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Related Parties |
– |
as defined by IAS 24. |
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|
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Interested Parties |
– |
as defined in the Israeli Securities Regulations (Presentation of Financial Statements), 1993. |
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|
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Controlling Shareholder |
– |
as defined in the Israeli Securities law and Regulations 1968. |
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|
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NIS |
– |
New Israeli Shekel. |
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|
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CPI |
– |
the Israeli consumer price index. |
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|
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Dollar |
– |
the U.S. dollar. |
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES |
| |
A. |
Applying
International Accounting Standards (IFRS) |
| |
The
condensed interim financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance with
International Accounting Standard (IAS) 34 – “Interim Financial Reporting”. |
| |
The
principal accounting policies described in the following notes were applied in accordance
to the IFRS, in a manner consistent with previous reporting periods presented in these
condensed interim financial statements and in accordance to the opening balance sheet. |
F - 7
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
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A. |
Applying
International Accounting Standards (IFRS) (Cont.) |
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(1) |
Basis
of preparation (Cont.) |
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The
unaudited condensed interim consolidated financial statements as of March 31, 2008 and
for the three months then ended (“interim financial statements”) of the Company
and subsidiaries should be read in conjunction with the audited consolidated financial
statements of the Company and subsidiaries as of December 31, 2007 and for the year then
ended, including the notes thereto including the note regarding the adoption of IFRS. |
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(2) |
First
term IFRS standards adoption |
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According
to standard No. 29 “Adoption of International Financial Reporting Standards”– IFRS
(“standard No. 29”), the Company applies International Financial Reporting
Standards and interpretations of the committee of the International Accounting Standard
Board (IASB) Starting January 1, 2008. |
| |
In
compliance with the abovementioned, the condensed interim financial statements, as of
March 31, 2008 and for the three months then ended, including all previous reporting
periods have been prepared under accounting policies consistent with International
Financial Reporting Standards and interpretations published by the International
Accounting Standard Board (IASB) and in accordance with International Accounting Standard
(IAS) 34 Interim Financial Reporting. |
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In
these condensed interim financial statements the Company applied IFRS 1 – “First
time Adoption of International Financial Reporting Standards” (“IFRS No. 1”),
which determines instructions for first time implementation of IFRS. |
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According
to IFRS No. 1 the effective date for implementing IFRS standards is commencing January 1,
2007. |
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The
Company has applied in a retroactive manner the IFRS standards for all reporting periods
presented in the condensed interim financial statements. The Company implemented the IFRS
standards which have been published as of the preparation date of the condensed interim
Financial Statements and expected to be affective as of December 31, 2008. |
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In
implementing the transitional rules as above, the Group elected to apply the following
concessions permitted by IFRS 1: |
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The
rules of IFRS 2, which deals with share based payments, were not retroactively applied
with regard to capital instruments which had been granted prior to November 7, 2002 and
vested before the transition date. |
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2. |
Translation
differences |
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The
company elected to desist from retroactively applying the rules of IAS 21 for translation
differences accumulated as of January 1, 2007 with respect to foreign operations. As a
result, accumulated translation differences have not been included in the Opening Balance
Sheet. |
F - 8
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
A. |
Applying
International Accounting Standards (IFRS) (Cont.) |
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(2) |
First
term IFRS standards adoption (cont.) |
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3. |
Deemed
cost for items of fixed assets |
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IFRS
1 permits the measurement of items of fixed assets as of the transition date to the IFRS,
or at an earlier date, on the basis of a revaluation executed according to previously
applied generally accepted accounting principles, as deemed cost as of the date of the
revaluation, if, in general, the revaluation was comparable to cost or undepreciated cost
according to the IFRS, adjusted for changes such as changes in the index of prices. |
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Through
December 31, 2007, the company adjusted its financial statements to changes in the rate
of exchange of the dollar, in accordance with the rules of Accounting Opinion 36 of the
Institute of Certified Public Accountants. |
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For
purposes of the transition to reporting pursuant to the IFRS, the company chose to apply
the concession in IFRS 1 as above and to measure the items of its fixed assets acquired
or constructed through December 31, 2003 at deemed cost as of that date, based on their
amounts, as adjusted to changes in the rate of exchange of the dollar up to that date. |
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Prior
to the adoption of the IFRS, the Group prepared its financial statements according to
accounting principles generally accepted in Israel. The latest annual financial
statements of the company according to accounting principles generally accepted in Israel
were prepared as of December 31, 2007 and for the year ended on that date. Comparative
figures for that period were restated in these financial statements pursuant to the IFRS. |
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See
Note 10 with respect to the material differences between reporting pursuant to the IFRS
and reporting according to Israeli generally accepted accounting principles, as they are
relevant to the Group. |
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B. |
The
condensed Financial Statements were prepared in accordance with section D of
the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. |
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Until
December 31, 2003, Israel was considered a country in which hyper-inflation conditions
exist. Therefore, non-monetary balances in the balance sheet were presented on the
historical nominal amount and were adjusted to changes in the exchange rate of the U.S.
dollar. As of December 31, 2003 when the economy ceases to be hyper-inflationary and the
Company no longer adjusted its financial statements to the U.S. dollar, the adjusted
amounts as of this date were used as the historical costs. The financial statements were
edited on the basis of the historical cost, except for: |
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— |
Derivative
financial instruments measured by fair value. |
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— |
Inventories
are stated at the lower of cost and net realizable value. |
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— |
Property,
plant and equipment and intangibles assets are presented at the lower of the cost less
accumulated amortizations and the recoverable amount. |
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— |
Liabilities to employees as described in note 2S below. |
F - 9
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
The
individual financial statements of each Group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For
the purpose of the consolidated financial statements, the results and financial position
of each entity are expressed in the New Israeli Shekel (“NIS”), which is the
functional currency of the Company and the presentation currency for the consolidated
financial statements, see note 2U (3) as follows with regard to the exchange rate and the
changes in them during the reported period. |
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In
preparing the financial statements of the individual entities, transactions in currencies
other than the entity’s functional currency (foreign currencies) are recorded at the
rates of exchange prevailing at the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. |
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Exchange
differences are recognised in profit or loss in the period which they were created,
except for exchange differences on transactions entered into in order to hedge certain
foreign currency risks. Hedge accounting details are set out in Note 2M below. |
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For
the purpose of presenting consolidated financial statements, the assets and liabilities
of the Group’s foreign operations of affiliated company (mainly because of it’s
investment in a subsidiary company that presents it’s financial statements in
foreign currency) are expressed in NIS using exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuated significantly during that period, in which case
the exchange rates at the dates of the transactions are used. |
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Goodwill
and fair value adjustments arising on the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the closing rate. |
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E. |
Basis
of consolidation |
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The
consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. |
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The
results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate. |
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Where
necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group. |
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All
intra-group transactions, balances, income and expenses are eliminated in full on
consolidation. |
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For
the effect of the issuance of IAS 27 (revised) ” Consolidated and Separate Financial
Statements” see note 2V below. |
F - 10
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
F. |
Investments
in associated companies |
| |
An
associated company is an entity over which the Group has significant influence and that
is neither a subsidiary nor an interest in joint venture. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but
is not control or joint control over those policies. |
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The
financial statements of the consolidated companies adopted to the accounting policies of
the group. |
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The results and assets and
liabilities of associates are incorporated in these financial statements using the equity
method of accounting. Under the equity method, investments in associates are carried in
the consolidated balance sheet at cost as adjusted for post-acquisition change in the
Group’s share of the net assets of the associate, less any impairment in the value of
individual investments. Losses of an associate in excess of the Group’s interest in
that associate (which includes any long-term interest that, in substance, form part of the
Group’s net investment in the associate) are recognized only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the
associate. With regard to the group’s examination for impairment in the investment in
affiliated companies in accordance to IAS 36 see note 2I below. |
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Where a group entity transacts with
an associate of the Group material, profits and losses are eliminated to the extent of the
Group’s interest in the relevant associate. |
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G. |
Property,
plant and equipment |
| |
Property,
plant and equipments are tangible items, which are held for use in the manufacture or
supply of goods or services, or leased to others, which are predicted to be used for more
than one period. The Company presents its property, plant and equipments items according
to the cost model. |
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Under
the cost method – a property, plant and equipment are presented at the balance sheet
at cost (net of any investment grants), less any accumulated depreciation and any
accumulated impairment losses. The cost includes the cost of the asset’s acquisition
as well as costs that can be directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by
management. |
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Spare
parts which are not used on a current basis are designated for use in the context of
specific items of fixed assets, where necessary. The reason for holding them is to
prevent delays in the manufacturing process and to avoid a shortage in spare parts in the
future. The spare parts that are not used on a current basis have not been installed on
items of fixed assets and are, therefore, not available for use in their present state.
In the light of this, spare parts that are not being used currently are presented with
fixed assets and are depreciated beginning from the date that they are installed on the
items of fixed assets for which they were purchased. |
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Depreciation is calculated using the
straight-line method at rates considered adequate to depreciate the assets over their
estimated useful lives. The depreciation starts once the asset is ready for use and takes
into consideration of the anticipated scrap value at the end of the asset’s useful
lives. |
F - 11
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
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G. |
Property,
plant and equipment (Cont.) |
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The
annual depreciation and amortization rates are: |
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|
%
|
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|
|
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Buildings |
10-50 |
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Machinery and equipment |
7-20 |
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Motor vehicles |
5-7 |
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Office furniture and equipment |
3-17 |
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Scrap
value, depreciation method and the assets useful lives are being reviewed by management
in the end of every financial year. Changes are handled as a change of estimation and are
applied from here on. |
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The
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in income statement. |
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Borrowing
costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are assed to the costs of those assets, until such time
as the assets are substantially ready for their intended use or sale. |
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Investment income earned on the
temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalization. The rest of the
borrowing costs are recognized in profit or loss. |
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For
the effect of the issuance of IAS 23 (revised) “Borrowing costs” see Note 2V
below. |
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I. |
Impairment
of tangible assets |
| |
At
each balance sheet date, the Group reviews the carrying amounts of its tangible assets to
determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss, if any. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are
also allocated to individual cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified. |
F - 12
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
I. |
Impairment
of tangible assets (cont.) |
| |
Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted. |
| |
If
the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is recognised immediately in profit
or loss. |
| |
Where
an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. |
| |
Inventories
are assets held for sale in the ordinary course of business, in the process of production
for such sale or in the form of materials or supplies to be consumed in the production
process or in the rendering of services. |
| |
Inventories
are stated at the lower of cost and net realizable value. Cost of inventories includes
all the cost of purchase, direct labor, fixed and variable production over heads and
other cost that are incurred, in bringing the inventories to their present location and
condition. |
| |
Net
realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. |
| |
Inventories
that purchased on differed settlement terms, which contains a financing element, are
stated in purchase price for normal credit terms. The difference between the purchase
price for normal credit terms and the amount paid is recognized as interest expense over
the period of the financing. |
| |
Cost
determined as follows: |
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|
|
| |
|
|
| |
Raw, auxiliary materials and others |
Based on weighted-average basis. |
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|
| |
Finished products |
Based on overhead absorption costing. |
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|
| |
Products |
Based on weighted-average basis. |
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The
spare parts that are in continuous use, are not associated with the specific fixed
assets. Some of these spare parts are even sold to the Group’s affiliated companies,
as needed, and are part of the inventory. Based on the experience accumulated by the
Company, these spare parts are held for no longer than 12 months. In light of the above,
the spare parts that are in continuous use are presented in inventory clause, and
recognized in the profit and loss report when used. |
F - 13
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Investments
are recognized and derecognized on trade date where the purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value. |
| |
Financial
assets are classified into loans and receivables and to financial assets through profit
and loss. The
classification of this category arises from the reason of the financial assets holding
and it is determined at its initial recognition. |
| |
(2) |
Loans
and receivables |
| |
Trade receivables, loans, and other
receivables that have fixed or determinable payments that are not quoted in an active
market are classified as loans and receivables. Loans and receivables are measured at
amortized cost using the effective interest method, less any impairment. Interest income
is recognized by applying the effective interest rate, except for short-term receivables
when the recognition of interest would be immaterial. |
| |
(3) |
Financial
assets at FVTPL |
| |
Financial
assets are classified as at FVTPL where the financial asset is either held for trading or
it is designated as at FVTPL. |
| |
A
financial asset is classified as held for trading if: |
| |
— |
it
has been acquired principally for the purpose of selling in the
near future; or |
| |
— |
it
is a part of an identified portfolio of financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or |
| |
— |
it
is a derivative that is not designated and effective as a hedging instrument. |
| |
Financial assets at FVTPL are stated
at fair value, with any resultant gain or loss recognized in profit or loss. The net gain
or loss recognized in profit or loss incorporates any dividend or interest earned on the
financial asset. |
F - 14
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
K. |
Financial
assets (Cont.) |
| |
(4) |
Impairment
of financial assets |
| |
Financial
assets, are assessed for indicators of impairment at each balance sheet date. |
| |
Financial
assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted. |
| |
Objective
evidence of impairment could include: |
| |
— |
significant
financial difficulty of the issuer or counterparty; or |
| |
— |
default
or delinquency in interest or principal payments; or |
| |
— |
it
becoming probable that the borrower will enter bankruptcy or financial re-organization. |
| |
For certain financial assets, such as
customers as to which no indications of value impairment have been identified, the company
evaluates value impairment on a specific basis, in reliance on past experience and changes
in the level of delinquency in payments, as well as economic changes related to the sector
and the economic environment in which it operates. |
| |
The
carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. |
| |
When
a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized
in profit or loss. |
F - 15
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
L. |
Financial
liabilities and equity instruments issued by the Group |
| |
(1) |
Classification
as debt or equity |
| |
Debt
and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement. |
| |
An
equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Group are
recorded at the proceeds received, net of direct issue costs. |
| |
Financial liabilities are classified
as either financial liabilities “at FVTPL” or “Other financial
liabilities” for the published IAS 32 (amended), financial instruments: present an
IAS-1: presentation of financial statements see note 2V as follows. |
| |
(2) |
Options
to sell sales of an investee |
| |
The
company has an obligation that is derived from an option that it gave for the sale of
shares of an investee, which provide the holder thereof with the right to sell its
holdings in the investee in consideration of a variable amount of cash. |
| |
The
value of the option was computed according to the economic value of the option and is
presented with non current liabilities, and classified as a liability at fair value
through operations. |
| |
Any
gain or loss that results from changes in the fair value of the option is recognized in
operations. |
| |
See
Note 10 E (4) below for further details on the conditions of the option. |
| |
(3) |
Other
financial liabilities |
| |
Other financial liabilities (capital
note issued to an investee), are initially measured at fair value, net of transaction
costs. Other financial liabilities are subsequently measured at amortized cost using the
effective interest method. |
| |
The
effective interest method is a method of calculating the amortized cost of a financial
liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or, where appropriate, a
shorter period. |
| |
For the treatment at CPI-linked other
financial liabilities see note 2L(4) below. |
| |
(4) |
CPI-linked
liabilities |
| |
The
Company has liabilities that are linked to the Consumer Price Index (hereinafter –the
CPI), which are not measured at fair value under the statement of income. The Company
determines the effective interest rate in respect of these liabilities as a real rate
with the addition of linkage differences in line with actual changes in the CPI until the
balance sheet date. This is also the approach used under generally accepted accounting
principles in Israel. |
F - 16
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
L. |
Financial
liabilities and equity instruments issued by the Group (cont.) |
| |
(4) |
CPI-linked
liabilities (cont.) |
| |
As
of the balance sheet date, the Company has CPI-linked financial liabilities in the total
sum of NIS 195,644 thousands. |
| |
There
is another interpretation of IFRS, under which the effective interest rate in respect of
these assets and liabilities should include the anticipated inflation up to the relevant
repayment dates (instead of accumulation of real interest plus linkage differences in
line with changes in the CPI until the balance sheet date). |
| |
The
vast majority of loans and long-term and medium-term financing arrangements in Israel are
linked to the CPI. Therefore, the Israeli Institute for Accounting Standards has
submitted a request to the International Financial Reporting Interpretation Committee
(IFRIC) to clarify the applicable method in the measurement of the effective interest
rate of such assets and liabilities under IFRS. |
| |
The
Committee’s response in this matter and the implications thereof cannot be reliably
predicted. If the Committee’s response indicates that the method used in Israel and
which was implemented in these financial statements is not appropriate in accordance with
IFRS, the Company will have to change the method of measurement of these assets and
liabilities and it may have to do so by way of restating its financial statements. Under
the present circumstances, the Company is unable to reliably measure the potential impact
on its financial statements in such a case. |
| |
M. |
Derivative
financial instruments |
| |
The
Group enters into a variety of derivative financial instruments to manage its exposure to
foreign exchange rate risk, including foreign exchange forward contracts on exchange rate,
options on exchange rate and contracts on the CPI due to notes. |
| |
Derivatives are initially recognized
at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each balance sheet date. The resulting gain or loss is
recognized in profit or loss immediately unless the derivative is designated and effective
as a hedging instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. The Group designates certain derivatives
as hedges of highly probable forecast transactions or hedges of foreign currency risk of
firm commitments (cash flow hedges). |
| |
A
derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities. |
F - 17
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
M. |
Derivative
financial instruments (Cont.) |
| |
The
Group designates certain hedging instruments, which include derivatives, and
non-derivatives in respect of foreign currency risk, as cash flow hedges. |
| |
At
the inception of the hedge relationship, the entity documents the relationship between
the hedging instrument and the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective in offsetting changes in fair
values or cash flows of the hedged item. |
| |
The effective portion of changes in
the fair value of derivatives that are designated and qualify as cash flow hedges are
deferred in capital fund. Since the hedge is for expected acquisition of fixed assets, the
company chose to add the capital fund to the initial cost of the hedges item immediately.
The gain or loss relating to the ineffective portion is recognised immediately in profit
or loss, and is included in the “finance income” or “finance expenses”
lines of the income statement. Amounts deferred in equity are recycled in profit or loss
in the periods when the hedged item is recognised in profit or loss, in the same line of
the income statement as the recognised hedged item. However, when the forecast transaction
that is hedged results in the recognition of a non-financial asset or a non-financial
liability, the gains and losses previously deferred in equity are transferred from equity
and included in the initial measurement of the cost of the asset or liability. |
| |
Hedge accounting is discontinued when
the Group revokes the hedging relationship, the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain
or loss deferred in fixed assets at that time remains in fixed assets and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was deferred
in equity is recognised immediately in profit or loss. |
| |
Revenue
is measured at the fair value of the consideration received or receivable.
Revenue is
reduced for estimated customer returns, rebates and other similar allowances. |
| |
Revenue
from the sale of goods is recognised when all the following conditions are satisfied: |
| |
— |
The
Group has transferred to the buyer the significant risks and rewards of ownership of
the goods; |
| |
— |
The
Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold |
| |
— |
The
amount of revenue can be measured reliably; |
F - 18
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
N. |
Revenue
recognition (cont.) |
| |
(1) |
Sale
of goods (Cont.) |
| |
— |
It
is probable that the economic benefits associated with the transaction will flow to
the entity; and |
| |
— |
The
costs incurred or to be incurred in respect of the transaction can be measured reliably. |
| |
Interest
revenue is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s
net carrying amount. |
| |
Revenue
is recognized when the Group’s right to receive the payment is established. |
| |
(4) |
Reporting
of revenues on a gross basis or a net basis |
| |
The
Company’s revenues as an agency or intermediary from providing electricity, water,
steam, and logistical services to the Group without bearing the risks and returns that
derive from the transaction, are presented on a net basis. |
| |
Leases
are classified as finance leases whenever the term of the lease transfer substantially
all the risks and rewands of ownership to the lessee. All other leases are classified as
operating leases. |
| |
Leases
of land from the Israel Lands Administration |
| |
Leases
of land from the Israel Lands Administration are classified as operating leases. The
deferred lease payments that were made on the date of the start of the lease are
presented in the balance sheet with “long term receivables”, and are amortized
on the straight line basis over the balance of the lease period, including the extension
option. |
| |
The
company has land lease rights from the Municipality of Tel Aviv which comply with the
definition of investment real estate, and, pursuant to IAS 40, have been classified as
operating leases and not as investment real estate. |
| |
Provisions
are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognized as a provision is the best estimate of the consideration required to
settle the present obligation at the balance sheet date, taking into account the risks
and uncertainties surrounding the obligation. |
| |
Where
a provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount is the present value of those cash flows. |
F - 19
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
When
some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably. |
| |
Q. |
Share
– Based payments |
| |
In
accordance with IFRS 2 and IFRIC 11, equity-settled share based payments to employees and
others providing similar services are measured at the fair value of the equity
instruments at the grant date. The Company determines the fair value of equity-settled
share-based transaction according to the Black-Scholes model. Details regarding the
determination of the fair value of share-based transactions are set out in note 6. |
| |
The
fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of equity instruments that will eventually vest. At each balance sheet date, the
Group revises its estimate of the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any, is recognized in profit or loss
over the remaining vesting period, with a corresponding adjustment to the equity-settled
employee benefits reserve. |
| |
For the effect of the issuance of
amendment to IFRS 2 Share Based Payment- Vesting and Revocation Conditions, see note 2V
below. |
| |
Income tax expense represents the sum
of the tax currently payable and change in deferred tax excluding deferred tax.as result
of transaction that was attribute directly to the equity. |
| |
The
tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance sheet date. |
| |
Deferred
tax is recognised on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and
deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. |
F - 20
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered. |
| |
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the balance sheet date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. |
| |
Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis. |
| |
(1) |
Benefits
after termination of employment |
| |
Company benefits after the
termination of employment include mainly benefits to pensioners (Most of the employees of
the company fall under Section 14 of the Severance Pay Law). |
| |
Actuarial
gains and losses recognized when incurred are recorded to the statement of income and
expenses but due to lack of materiality, they are recorded to the statements of
operations. Past service cost is recognized immediately in the company’s statements
of operations up to the extent that the benefit has vested. Unvested past service cost is
amortized over the average vesting period under the date of vesting. |
F - 21
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
S. |
Retirement
benefit costs (cont.) |
| |
(2) |
Other
long term employee benefits |
| |
Other
long term employee benefits are benefits which it is anticipated will be utilized or
which are to be paid during a period that exceeds 12 months from the end of the period in
which the service that creates entitlement to the benefit was provided. |
| |
Other
employee benefits of the company include liabilities for vacation pay. These liabilities
are recorded to operations in accordance with the projected unit credit method, through
the use of actuarial estimates which are performed at each balance sheet date. The
present value of the company’s obligation for vacation pay was determined by means
of the capitalization of anticipated future cash flows from the program at market yields
of government bonds, denominated in the currency in which the benefits for vacation will
be paid and having redemption dates nearly identical to the forecasted payment dates of
the vacation pay. |
| |
Gains
and losses are recorded to the statement of operations at the time that they are created.
Past service cost is immediately recognized in the financial statements of the company. |
| |
(3) |
Short
term employee benefits |
| |
Short
term employee benefits are benefits which it is anticipated will be utilized or which are
to be paid during a period that does not exceed 12 months from the end of the period in
which the service that creates entitlement to the benefit was provided. |
| |
Short
term company benefits include the company’s liability for short term absences,
payment of grants, bonuses and compensation. These benefits are recorded to the statement
of operations when created. The benefits are measured on a non capitalized basis. The
difference between the amount of the short term benefits to which the employee is
entitled and the amount paid is therefore recognized as an asset or liability. |
F - 22
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
The
computation of basic net income per share is generally based on earnings available for
distribution to holders of ordinary shares, divided by the weighted average number of
ordinary shares outstanding during the period. |
| |
In
computing diluted net incomeper share, the weighted average number of shares to be
issued, assuming that all dilutive potential shares are converted into shares, is to be
added to the average number of ordinary shares used in the computation of the basic
income (loss) per share. Potential shares are taken into account, as above, only when
their effect is dilutive (reducing net income per share from continuing activities). |
| |
U. |
Exchange
Rates and Linkage Basis |
| |
(1) |
Foreign
currency balance, or balances linked to foreign currency are included in
the financial statements according to the exchange rate announced by the
Bank of Israel on the balance sheet date. |
| |
(2) |
Balances
linked to the CPI are presented according to index of the last month of
the report period (the index of the month of the financial reports). |
| |
(3) |
Following
are the changes in the representative exchange rates of the Euro and the
U.S. dollar vis-a-vis the NIS and in the Israeli Consumer Price Index (“CPI”): |
| |
As of:
|
Representative
exchange rate of
the Euro
(NIS per
€1)
|
Representative
exchange rate of
the dollar
(NIS per $1)
|
CPI
"in respect of"
(in points)
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
March 31, 2008 |
|
|
| 5.616 |
|
| 3.553 |
|
| 102.60 |
|
| |
March 31, 2007 | | |
| 5.534 |
|
| 4.155 |
|
| 98.90 |
|
| |
December 31, 2007 | | |
| 5.6592 |
|
| 3.846 |
|
| 102.50 |
|
| |
Increase (decrease) during the:
|
%
|
%
|
%
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three months ended March 31, 2008 |
|
|
| (0.8 |
) |
| (7.6 |
) |
| 0.1 |
|
| |
Three months ended March 31, 2007 | | |
| (1.7 |
) |
| 1.65 |
|
| (0.2 |
) |
| |
Year ended December 31, 2007 | | |
| 1.7 |
|
| (9.0 |
) |
| 3.4 |
|
F - 23
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
V. |
Adoption
of new and revised Standards and interpretations |
| |
Standards,
Amended Standards and Clarifications that have been Published but not yet Become
Effective, and have not been Adopted by the Company in Early Adoption |
| |
IAS
1 (Amended) “Presentation of Financial Statements” |
| |
The
standard stipulates the presentation required in the financial statements, and itemizes a
general framework for the structure of the financial statements and the minimal contents
which must be included in the context of the report. Changes have been made to the
existing presentation format of the financial statements, and the presentation and
disclosure requirements for the financial statements have been broadened, including the
presentation of an additional report in the framework of the financial statements known
as the “report of comprehensive income”, and the addition of a balance sheet as
of the beginning of the earliest period that was presented in the financial statements,
in cases of changes in accounting policy by means of retroactive implementation, in cases
of restatement and in cases of reclassifications. |
| |
The
standard will be effective for reporting periods beginning from January 1, 2009. The
standard permits earlier application. |
| |
At
this stage, the management of the Group is unable to assess the effect of the standard on
the financial statements. |
| |
IAS
23 (Amended) “Borrowing Costs” |
| |
The
standard stipulates the accounting treatment of borrowing costs. In the context of the
amendment to this standard, the possibility of immediately recognizing borrowing costs
related to assets with an uncommon period of eligibility or construction in the statement
of operations was cancelled. The standard will apply to borrowing costs that relate to
eligible assets as to which the capitalization period began from January 1, 2009. The
standard permits earlier implementation. |
| |
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
| |
IFRS
8, Operating Segments |
| |
The
standard, which replaces IAS 14, details how an entity must report on data according to
segments in the annual financial statements. The standard, among other things, stipulates
that segmental reporting of the company will be based on the information that management
of the company uses for purposes of evaluating performance of the segments, and for
purposes of allocating resources to the various operating segments. The standard will
apply to annual reporting periods commencing on January 1, 2009, with restatement of
comparative figures for prior reporting periods. The standard permits earlier adoption. |
| |
At
this stage, the management of the Group estimated that the implementation of the standard
is not expected to have any influence on the financial statements of the Group. |
F - 24
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
| |
Standards,
Amended Standards and Clarifications that have been Published but not yet Become
Effective, and have not been Adopted by the Company in Early Adoption (cont.) |
| |
IAS
27 (Amended) “Consolidated and Separate Financial Statements “ |
| |
The
standard prescribes the rules for the accounting treatment of consolidated and separate
financial statements. Among other things, the standard stipulates that transactions with
minority shareholders, in the context of which the company holds control of the
subsidiary before and after the transaction, will be treated as capital transactions. In
the context of transactions, subsequent to which the company loses control in the
subsidiary, the remaining investment is to be measured as of the date that control is
lost, at fair value, with the difference as compared to book value to be recorded to the
statement of operations. The minority interest in the losses of a subsidiary, which
exceed its share in shareholders’ equity, will be allocated to it in every case,
while ignoring its obligations and ability to make additional investments in the
subsidiary. |
| |
The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2010 and thereafter. Earlier adoption is permitted, on the condition that it
will be done simultaneous with early adoption of IFRS 3 (amended). The standard will be
implemented retrospectively, excluding a number of exceptions, as to which the provisions
of the standard will be implemented prospectively. At this stage, the management of the
Group estimated that the implementation of the standard is not expected to have any
influence on the financial statements of the Group. |
| |
IFRS
3 (Amended) “Business Combinations” |
| |
The
new standard stipulates the rules for the accounting treatment of business combinations.
Among other things, the standard determines measurement rules for contingent
consideration in business combinations which is to be measured as a derivative financial
instrument. The transaction costs directly connected with the business combination will
be recorded to the statement of operations when incurred. Minority interests will be
measured at the time of the business combination to the extent of their share in the fair
value of the assets, including goodwill, liabilities and contingent liabilities of the
acquired entity, or to the extent of their share in the fair value of the net assets, as
aforementioned, but excluding their share in goodwill. |
| |
As
for business combinations where control is achieved after a number of acquisitions
(acquisition in stages), the earlier purchases of the acquired company will be measured
at the time that control is achieved at their fair value, while recording the difference
to the statement of operations. |
| |
The
standard will apply to business combinations that take place from January 1, 2010 and
thereafter. Earlier adoption is possible, on the condition that it will be simultaneous
with early adoption of IAS 27 (amended). |
| |
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
F - 25
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
V. |
Adoption
of new and revised Standards and interpretations (cont.) |
| |
Standards,
Amended Standards and Clarifications that have been Published but not yet Become
Effective, and have not been Adopted by the Company in Early Adoption (cont.) |
| |
IFRIC
13, Customer Loyalty Programs |
| |
The
clarification stipulates that transactions for the sale of goods and services, for which
the company confers reward grants to its customers, will be treated as multiple component
transactions and the payment received from the customer will be allocated between the
different components, based upon the fair value of the reward grants. The consideration
attributed to the grant will be recognized as revenue when the reward grants are redeemed
and the company has made a commitment to provide the grants. |
| |
The
directives of the clarification apply to annual reporting periods commencing on January
1, 2009. Earlier implementation is permissible. |
| |
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
| |
Amendment
to IFRS 2, Share Based Payment- Vesting and Revocation Conditions |
| |
The
amendment to the standard stipulates the conditions under which the measurement of fair
value must be considered on the date of the grant of a share based payment and explains
the accounting treatment of instruments without terms of vesting and revocation. The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2009 and thereafter. Earlier adoption is permitted. |
| |
At
this stage, the management of the Group is unable to assess the effect of the standard on
its financial condition and operating results. |
| |
Amendment
to IAS 32, Financial Instruments: Presentation, and IAS 1,Presentation of Financial
Statements |
| |
The
amendment to IAS 32 changes the definition of a financial liability, financial asset and
capital instrument and determines that certain financial instruments, which are
exercisable by their holder, will be classified as capital instruments. |
| |
The
provisions of the standard apply to annual financial reporting periods which start on
January 1, 2009 and thereafter. Earlier adoption is permitted.
At this stage, the
management of the Group is unable to assess the effect of the standard on its financial
condition and operating results. |
| NOTE 3 |
– |
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
| |
In
the application of the Group’s accounting policies, which are described in Note 2,
management is required to make judgments, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates. |
| |
The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods. |
F - 26
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 3 |
– |
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.) |
| |
B. |
Critical
judgments in applying accounting policies |
| |
The
following are the critical judgments, apart from those involving estimations (see below),
that the management have made in the process of applying the entity’s accounting
policies and that have the most significant effect on the amounts recognized in financial
statements: |
| |
— |
Deferred
taxes- the company recognizes deferred tax assets for all of the deductible temporary
differences up to the amount as to which it is anticipated that there will be taxable
income against which the temporary difference will be deductible. During each period, for
purposes of calculation of the utilizable temporary difference, management uses estimates
and approximations as a basis which it evaluates each period. |
| |
— |
Approximation
of length of life of items of fixed assets- each period, the company’s management
evaluates salvage values, depreciation methods and length of useful lives of the fixed
assets. |
| |
— |
Measurement
of provisions and contingent liabilities and contingent liabilities- see C(1) below. |
| |
— |
Measurement
of obligation for defined benefits and employee benefits- see C(2) below. |
| |
— |
Measurement
of share based payments- see Note 6 below. |
| |
C. |
Key
sources of estimation uncertainty. |
| |
1. |
Provisions
for legal proceeding |
| |
Against the company and its
subsidiaries there are 6 claims pending and open in a total amount of approximately NIS
20,024 thousands (March 31, 2007: NIS 11,334 thousands, December 31, 2007: NIS 23,154
thousands), as to which a provision of approximately NIS 400 thousands (March 31, 2007:
NIS 300 thousands, December 31, 2007: NIS 300 thousands) was recorded. For purposes of
evaluating the legal relevance of these claims, as well as determining the reasonableness
that they will be realized to its detriment, the company’s management relies on the
opinion of legal and professional advisors. After the company’s advisors expound
their legal position and the probabilities of the company as regards the subject of the
claim, whether the company will have to bear its consequences or whether it is will be
able to rebuff it, the company approximates the amount which it must record in the
financial statements, if at all. An interpretation that differs from that of the legal
advisors of the company as to the existing legal situation, a varying understanding by the
company’s management of the contractual agreements as well as changes derived from
relevant legal rulings or the addition of new facts may influence the value of the overall
provision with respect to the legal proceedings that are pending against the company and,
thus affect the company’s financial condition and operating results. |
F - 27
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 3 |
– |
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.) |
| |
The
present value of the company’s obligation for the payment of benefits to pensioners
and severance pay to employees that are not covered under Section 14 to the Severance Pay
Law is based upon a great amount of data, which are determined on the basis of an
actuarial estimation, through the utilization of a large number of assumptions, including
the capitalization rate. Changes in the actuarial assumptions could affect the book value
of the obligation of the company for employees’ benefits. The company approximates
the capitalization rate once annually, on the basis of the capitalization rate of
government bonds. Other key assumptions are determined on the basis of conditions present
in the market, and on the basis of the cumulative past experience of the company. |
| NOTE 4 |
– |
SEGNIFICANT TRANSACTIONS AND EVENTS |
| |
— |
During
the first quarter of the year, the company signed material agreements with various
suppliers in connection with the construction of a new production system for packaging
paper (Machine 8). |
| |
— |
On January 14, 2008, the Board of Directors of the company decided to approve the issuance
of options to executive employees, see Note 6 below. |
| |
Acquisition
of items of fixed assets |
| |
During
the period of three months ended March 31, 2008 and March 31, 2007, the company became
committed in agreements to purchase fixed assets at a cost of approximately NIS 57,985
thousands and NIS 11,171 thousands, respectively. Most of the acquisitions of the fixed
assets during the first quarter of the year were made for Machine 8- a machine for the
new packaging paper system. The total fixed assets acquired for suppliers’ credit
amounted to NIS 3,652 thousands as of March 31, 2008. |
F - 28
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 6 |
– |
SHARE BASED PAYMENT |
| |
In
January 2008, the Board of Directors of the Company approved a program for the allotment,
for no consideration, of non marketable options to the CEO of the company, to employees
and officers of the company and investees. In the context of the program, an allotment of
287,750 options was approved, of which 40,250 options were to the CEO of the company,
135,500 to management of the subsidiaries and 74,750 to management of the affiliates.
On May 11, 2008, the board of
directors of the company approved the allotment to a trustee of the balance of
the options that had not been allotted through that date, in the amount of 32,250 options
as a pool for the future grant to officers and employees of investees, subject to the
approval of the board of directors.
The date of grant of the options was set for the months of January- March 2008, subject
to restrictions of Section 102 (capital route) of the Income Tax Ordinance. As of the
date of approval of the financial statements, 250,500 options had been allotted. Each
option is exercisable into one ordinary share of the company with NIS 0.01 par value
against the payment of an exercise increment in the amount of NIS 223.965 (subject to
adjustments). The options will vest in installments as follows: 25% of the total options
will be exercisable from January 14, 2009; 25% of the total options will be exercisable
from January 14, 2010; 25% of the total options will be exercisable from January 14,
2011; and 25% of the total options will be exercisable from January 14, 2012. The vested
options are exercisable through January 14, 2012, 2013, 2014 for the first and second,
third and fourth portions, respectively. |
| |
The
cost of the benefit embedded in the allotted options as above, on the basis of the fair
value as of the date they are granted, was approximated to be the amount of approximately
NIS 13.5 million. This amount will be charged to the statement of operations over the
vesting period. The debt for the grant to officers of the affiliates will be paid in
cash. |
| |
The
fair value of the options granted as aforementioned was estimated by applying the Black
and Scholes model. In this context, the effect of the terms of vesting will not taken
into account by the company, other than the market condition of fair value of the capital
instruments granted. |
| |
The
parameters which were used for implementation of the model are as follows: |
| Share price (NIS) |
217.10 - 245.20 |
| Exercise price (NIS) |
223.965 |
| Anticipated volatility (*) |
27.04% |
| Length of life of the options (years) |
3-5 |
| Non risk interest rate |
5.25% |
| |
(*)
The anticipated volatility is determined on the basis of historical
fluctuations of the share price of the company. The average length of life of
the option was determined in accordance with management’s forecast as to
the holding period by the employees of options granted to them, in
consideration of their functions in the company and past experience of the
company with employees leaving. |
| NOTE 7 |
– |
INCOME TAX CHARGE |
| |
On
February 26, 2008, the Knesset ratified the third reading of the Income Tax Law (“Inflation
Adjustments”) (Amendment 20) (Limitation of Term of Validity) –2008
(hereinafter: “The Amendment”), pursuant to which the application of the
inflationary adjustment law will terminate in tax year 2007 and as of tax year 2008, the
law will no longer apply, other than transition regulations whose intention it is to
prevent distortions in tax calculations. |
| |
According
to the amendment, in tax year 2008 and thereafter, the adjustment of revenues for tax
purposes will no longer be considered a real-term basis for measurement. Moreover, the
linkage to the CPI of the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be adjusted until the
CPI at the end of 2007 and their linkage to the CPI will end as of that date. |
F - 29
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 8 |
– |
SEGMENT INFORMATION |
| |
|
Three months ended March 31, 2008
|
| |
|
(Unaudited)
|
| |
|
Paper and
recycling
|
Marketing of
office supplies
|
Total
|
| |
|
|
|
|
| |
|
|
|
|
| |
Revenue |
|
|
| 109,347 |
|
| 33,172 |
|
| 142,519 |
|
| |
|
| |
| |
| |
| |
Segment results | | |
| 16,866 |
|
| 595 |
|
| 17,461 |
|
| |
|
| |
| |
| |
| |
|
Three months ended March 31, 2007
|
| |
|
(Unaudited)
|
| |
|
Paper and
recycling
|
Marketing of
office supplies
|
Total
|
| |
|
|
|
|
| |
|
|
|
|
| |
Revenue |
|
|
| 107,215 |
|
| 29,423 |
|
| 136,638 |
|
| |
|
| |
| |
| |
| |
Segment results | | |
| 16,983 |
|
| (468 |
) |
| 16,515 |
|
| |
|
| |
| |
| |
| |
|
Year ended December 31, 2007
|
| |
|
Paper and
recycling
|
Marketing of
office supplies
|
Total
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Revenue |
|
|
| 464,653 |
|
| 118,997 |
|
| 583,650 |
|
| |
|
| |
| |
| |
| |
Segment results | | |
| 69,594 |
|
| 464 |
|
| 70,058 |
|
| |
|
| |
| |
| |
F - 30
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 9 |
– |
CHANGES IN EQUITY |
|
Share
capital
|
Capital
reserves
|
Share based
payments
reserves
|
Capital reserves
resulting
from
tax
benefit on
exercise of
employee options
|
Hedging
reserves
|
Foreign
currency
translation
reserves
|
Retained
earnings
|
Total
|
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| March 31, 2008 (unaudited) | | |
| | | |
| Balance - January 1, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| - |
|
| 3,397 |
|
| (635 |
) |
| 3,810 |
|
| 236,437 |
|
| 669,971 |
|
| Exchange differences arising on | | |
| translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (20,008 |
) |
| - |
|
| (20,008 |
) |
| Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 88 |
|
| - |
|
| - |
|
| 88 |
|
| Share based payment | | |
| - |
|
| - |
|
| 723 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 723 |
|
| Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 21,270 |
|
| 21,270 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| Balance - March 31, 2008 | | |
| 125,267 |
|
| 301,695 |
|
| 723 |
|
| 3,397 |
|
| (547 |
) |
| (16,198 |
) |
| 257,707 |
|
| 672,044 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
F - 31
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 9 |
– |
CHANGES IN EQUITY (Cont.) |
|
Share capital
|
Capital
reserves
|
Capital reserves
resulting from tax
benefit on
exercise of
employee options
|
Hedging
reserves
|
Foreign
currency
translation
reserves
|
Retained
earnings
|
Total
|
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| March 31, 2007 (unaudited) | | |
| | | |
| Balance - January 1, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 2,414 |
|
| - |
|
| - |
|
| 204,902 |
|
| 422,633 |
|
| Exchange differences arising on | | |
| translation of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (598 |
) |
| - |
|
| (598 |
) |
| Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| (63 |
) |
| - |
|
| - |
|
| (63 |
) |
| Exercise of employee option into shares | | |
| - |
|
| - |
|
| 259 |
|
| - |
|
| - |
|
| - |
|
| 259 |
|
| Profit (loss) for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (3,877 |
) |
| (3,877 |
) |
|
| |
| |
| |
| |
| |
| |
| |
| Balance - March 31, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| 2,673 |
|
| (63 |
) |
| (598 |
) |
| 201,025 |
|
| 418,354 |
|
|
| |
| |
| |
| |
| |
| |
| |
32
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 9 |
– |
CHANGES IN EQUITY (Cont.) |
|
Share capital
|
Capital
reserves
|
Foreign currency
translation
reserves
|
Capital reserves
resulting from tax
benefit on exercise
of employee options
|
Hedging reserves
|
Retained earnings
|
Total
|
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | | |
| Balance - January 1, 2007 | | |
| 125,257 |
|
| 90,060 |
|
| - |
|
| 2,414 |
|
| - |
|
| 204,902 |
|
| 422,633 |
|
| Issuance of shares (deduction of cost issuance in the | | |
| amount of NIS 1,581 thousands) | | |
| 10 |
|
| 211,635 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 211,645 |
|
| Exchange differences arising on translation of | | |
| foreign operations | | |
| - |
|
| - |
|
| 3,810 |
|
| - |
|
| - |
|
| - |
|
| 3,810 |
|
| Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (635 |
) |
| - |
|
| (635 |
) |
| Exercise of employee options into shares | | |
| - |
|
| - |
|
| - |
|
| 983 |
|
| - |
|
| - |
|
| 985 |
|
| Profit for the year | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 31,535 |
|
| 31,535 |
|
|
| |
| |
| |
| |
| |
| |
| |
| Balance - December 31, 2007 | | |
| 125,267 |
|
| 301,695 |
|
| 3,810 |
|
| 3,397 |
|
| (635 |
) |
| 236,437 |
|
| 669,971 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 33
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS |
| |
Following
the publication of Accounting Standard No. 29, “the Adoption of International
Financial Reporting Standards (IFRS)” in July 2006, the Company adopted IFRS
starting January 1, 2008. |
| |
Pursuant
to the provisions of IFRS1, which deals with the first-time adoption of IFRS, and
considering the date in which the Company elected to adopt these standards for the first
time, the financial statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31, 2008, and for the year
ended on that date. The date of transition of the Company to reporting under IFRS, as it
is defined in IFRS 1, is January 1, 2007 (hereinafter: “the transition date”),
with an opening balance sheet as of January 1, 2007 (hereinafter: “Opening Balance”).
The Company’s interim financial statements for 2008 will also be drawn up in
accordance with IFRS, and shall include comparative figures for the year. |
| |
Under
the opening balance sheet, the Company performed the following reconciliations: |
| |
— |
Recognition
of all assets and liabilities whose recognition is required by IFRS. |
| |
— |
De-recognition
of assets and liabilities if IFRS do not permit such recognition. |
| |
— |
Classification
of assets, liabilities and components of equity according to IFRS. |
| |
— |
Application
of IFRS in the measurement of all recognized assets and liabilities. |
| |
IFRS
1 states that all IFRS shall be adopted retroactively for the opening balance sheet. At
the same time, IFRS 1 includes 14 reliefs, in respect of which the mandatory retroactive
implementation does not apply. As to the reliefs implemented by the Company, see section
F below. |
| |
Changes
in the accounting policy which the Company implemented retroactively in the opening
balance sheet under IFRS, compared to the accounting policy in accordance with Generally
Accepted Accounting Principles in Israel, were recognized directly under Retained
Earnings or another item of Shareholders’ Equity, as the case may be. |
| |
This
note is formulated on the basis of International Financial Reporting Standards and the
notes thereto as they stand today, that have been published and shall enter into force or
that may be adopted earlier as at the Group’s first annual reporting date according
to IFRS, December 31, 2008. Pursuant to the above, the Company’s management has made
assumptions regarding the anticipated financial reporting regulations that are expected
to be implemented when the first annual financial statements are prepared according to
IFRS, for the year ended December 31, 2008. |
| |
The
IFRS standards that will be in force or that may be adopted in the financial
statements for the year ended December 31, 2008 are subject to changes and the
publication of additional clarifications. Consequently, the financial reporting
standards that shall be applied to the represented periods will be determined finally
only upon preparation of the first financial statements according to IFRS, as at December
31, 2008. |
| |
Listed
below are the Company’s consolidated balance sheets as of January 1, 2007, March 31,
2007 and December 31, 2007, the consolidated statement of income and the shareholders’ equity
for the year ended on December 31, 2007 and the three months ended March 31, 2007
prepared in accordance with International Accounting Standards. In addition, the table
presents the material reconciliations required for the transition from reporting under
Israeli GAAP to reporting under IFRS. |
F - 34
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS: |
|
|
March 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| |
|
| 58,022 |
|
| - |
|
| 58,022 |
|
| Trade receivables | | |
| |
|
| 177,617 |
|
| (226 |
) |
| 177,391 |
|
| Other current assets | | |
| E1 |
|
| 107,124 |
|
| (10,703 |
) |
| 96,421 |
|
| Inventories | | |
| |
|
| 65,766 |
|
| - |
|
| 65,766 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 408,529 |
|
| (10,929 |
) |
| 397,600 |
|
|
|
| |
| |
| |
| Non-Current Assets | | |
| Property, plant and equipment | | |
| E2 |
|
| 403,662 |
|
| (34,835 |
) |
| 368,827 |
|
| Investment in associated companies | | |
| E8 |
|
| 336,902 |
|
| (1,659 |
) |
| 335,243 |
|
| Deferred tax assets | | |
| E1 |
|
| 6,490 |
|
| 13,123 |
|
| 19,613 |
|
| Lease receivables | | |
| E2 |
|
| - |
|
| 29,886 |
|
| 29,886 |
|
| Other assets | | |
| |
|
| - |
|
| 2,046 |
|
| 2,046 |
|
| Employee benefit assets | | |
| |
|
| - |
|
| 1,113 |
|
| 1,113 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 747,054 |
|
| 9,674 |
|
| 756,728 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 1,155,583 |
|
| (1,255 |
) |
| 1,154,328 |
|
|
|
| |
| |
| |
| Current Liabilities | | |
| Credit from banks and others | | |
| |
|
| 202,237 |
|
| - |
|
| 202,237 |
|
| Current maturities to long term notes | | |
| and term loans | | |
| |
|
| 41,454 |
|
| - |
|
| 41,454 |
|
| Trade payables | | |
| |
|
| 95,604 |
|
| - |
|
| 95,604 |
|
| Other payables and accrued expenses | | |
| E4, E3 |
|
| 93,737 |
|
| (21,552 |
) |
| 72,185 |
|
| Financial liabilities at fair value through | | |
| Profit and loss | | |
| E4 |
|
| - |
|
| 1,465 |
|
| 1,465 |
|
| Current tax liabilities | | |
| E7 |
|
| - |
|
| 8,176 |
|
| 8,176 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 433,032 |
|
| (11,911 |
) |
| 421,121 |
|
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Loans from banks and others | | |
| |
|
| 32,181 |
|
| - |
|
| 32,181 |
|
| Notes | | |
| |
|
| 189,212 |
|
| - |
|
| 189,212 |
|
| Other non-current liabilities | | |
| |
|
| 32,770 |
|
| (1170 |
) |
| 31,600 |
|
| Deferred tax liabilities | | |
| E7 |
|
| 41,475 |
|
| - |
|
| 41,475 |
|
| Employee benefit liabilities | | |
| E3 |
|
| - |
|
| 20,385 |
|
| 20,385 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 295,638 |
|
| 19,215 |
|
| 314,853 |
|
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| |
|
| 426,913 |
|
| (8,559 |
) |
| 418,354 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 1,155,583 |
|
| (1,255 |
) |
| 1,154,328 |
|
|
|
| |
| |
| |
F - 35
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS (Cont.) |
|
|
December 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| |
|
| 167,745 |
|
| - |
|
| 167,745 |
|
| Trade receivables | | |
| |
|
| 178,771 |
|
| (218 |
) |
| 178,553 |
|
| Other current assets | | |
| E1 |
|
| 105,109 |
|
| (10,694 |
) |
| 94,415 |
|
| Inventories | | |
| |
|
| 69,607 |
|
| - |
|
| 69,607 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 521,232 |
|
| (10,912 |
) |
| 510,320 |
|
|
|
| |
| |
| |
| Non-Current Assets | | |
| Property, plant and equipment | | |
| E2 |
|
| 445,566 |
|
| (34,726 |
) |
| 410,840 |
|
| Investment in associated companies | | |
| E8 |
|
| 346,186 |
|
| 217 |
|
| 346,403 |
|
| Deferred tax assets | | |
| E1 |
|
| 6,083 |
|
| 14,539 |
|
| 20,622 |
|
| Lease receivables | | |
| E2 |
|
| - |
|
| 29,291 |
|
| 29,291 |
|
| Other assets | | |
| |
|
| - |
|
| 1,578 |
|
| 1,578 |
|
| Employee benefit assets | | |
| |
|
| - |
|
| 1,179 |
|
| 1,179 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 797,835 |
|
| 12,078 |
|
| 809,913 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 1,319,067 |
|
| 1,166 |
|
| 1,320,233 |
|
|
|
| |
| |
| |
| Current Liabilities | | |
| Credit from banks and others | | |
| |
|
| 143,015 |
|
| - |
|
| 143,015 |
|
| Current maturities to long term notes | | |
| and term loans | | |
| |
|
| 42,775 |
|
| - |
|
| 42,775 |
|
| Trade payables | | |
| |
|
| 108,409 |
|
| - |
|
| 108,409 |
|
| Other payables and accrued expenses | | |
| E4, E3 |
|
| 87,235 |
|
| (14,005 |
) |
| 73,230 |
|
| Financial liabilities at fair value through | | |
| Profit and loss | | |
| |
|
| - |
|
| 3,901 |
|
| 3,901 |
|
| Current tax liabilities | | |
| E4 |
|
| - |
|
| 908 |
|
| 908 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 381,434 |
|
| (9,196 |
) |
| 372,238 |
|
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Loans from banks and others | | |
| |
|
| 28,127 |
|
| - |
|
| 28,127 |
|
| Notes | | |
| |
|
| 158,134 |
|
| - |
|
| 158,134 |
|
| Other non-current liabilities | | |
| |
|
| 32,770 |
|
| (1,560 |
) |
| 31,210 |
|
| Deferred tax liabilities | | |
| E7 |
|
| 40,515 |
|
| - |
|
| 40,515 |
|
| Employee benefit liabilities | | |
| E3 |
|
| - |
|
| 20,038 |
|
| 20,038 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 259,546 |
|
| 18,478 |
|
| 278,024 |
|
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| |
|
| 678,087 |
|
| (8,116 |
) |
| 669,971 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 1,319,067 |
|
| 1,166 |
|
| 1,320,233 |
|
|
|
| |
| |
| |
F - 36
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
C. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS |
|
|
Three months ended
March 31, 2007
|
Year ended
December 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
|
|
NIS in thousands
|
NIS in thousands
|
|
Note
|
(Unaudited)
|
|
|
|
| |
|
|
|
|
|
|
|
| Revenue |
|
|
| |
|
| 136,638 |
|
| - |
|
| 136,638 |
|
| 583,650 |
|
| - |
|
| 583,650 |
|
| Cost of sales | | |
| |
|
| 104,066 |
|
| 401 |
|
| 104,467 |
|
| 440,854 |
|
| 527 |
|
| 441,381 |
|
|
|
| |
| |
| |
| |
| |
| |
| Gross profit | | |
| |
|
| 32,572 |
|
| (401 |
) |
| 32,171 |
|
| 142,796 |
|
| (527 |
) |
| 142,269 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating costs and expenses | | |
| Selling expenses | | |
| |
|
| 7,696 |
|
| - |
|
| 7,696 |
|
| 31,367 |
|
| - |
|
| 31,367 |
|
| General and administrative | | |
| expenses | | |
| |
|
| 8,008 |
|
| 99 |
|
| 8,107 |
|
| 36,060 |
|
| 317 |
|
| 36,377 |
|
| | | |
| Other income (expenses), net | | |
| E6 |
|
| - |
|
| 147 |
|
| 147 |
|
| (2,178 |
) |
| (2,289 |
) |
| (4,467 |
) |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating profit | | |
| |
|
| 16,868 |
|
| (353 |
) |
| 16,515 |
|
| 73,191 |
|
| (3,133 |
) |
| 70,058 |
|
| | | |
| Finance expenses | | |
| E5 |
|
| 7,469 |
|
| 390 |
|
| 7,859 |
|
| 30,206 |
|
| (1,560 |
) |
| 31,766 |
|
| Finance income | | |
| E5 |
|
| 1,275 |
|
| - |
|
| 1,275 |
|
| 10,648 |
|
| - |
|
| 10,648 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Finance income | | |
| (expenses), net | | |
| |
|
| (6,194 |
) |
| (390 |
) |
| (6,584 |
) |
| (19,558 |
) |
| (1,560 |
) |
| (21,118 |
) |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit (loss) after | | |
| financial income (expenses) | | |
| |
|
| 10,674 |
|
| (743 |
) |
| 9,931 |
|
| 53,633 |
|
| (4,693 |
) |
| 48,940 |
|
|
|
| |
| |
| |
| |
| |
| |
| Share of profit (loss) of associated companies-net | | |
| E8 |
|
| (10,798 |
) |
| 303 |
|
| (10,495 |
) |
| (2,884 |
) |
| 3,740 |
|
| 856 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit (loss) before tax | | |
| |
|
| (124 |
) |
| (440 |
) |
| (564 |
) |
| 50,749 |
|
| (953 |
) |
| 49,796 |
|
| | | |
| Taxes on income | | |
| |
|
| 3,403 |
|
| (90 |
) |
| 3,313 |
|
| 19,307 |
|
| (1,046 |
) |
| 18,261 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit (loss) for the period | | |
| |
|
| (3,527 |
) |
| (350 |
) |
| (3,877 |
) |
| 31,442 |
|
| 93 |
|
| 31,535 |
|
|
|
| |
| |
| |
| |
| |
| |
F - 37
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
C. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS (Cont.) |
|
Three months ended
March 31, 2007
|
Year ended
December 31, 2007
|
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
|
NIS in thousands
|
NIS in thousands
|
|
(Unaudited)
|
|
|
|
| |
|
|
|
|
|
|
| Earnings per share: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | | |
| Primary | | |
| (0.87 |
) |
| (0.09 |
) |
| (0.96 |
) |
| 7.61 |
|
| (0.02 |
) |
| 7.63 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Fully diluted | | |
| (0.87 |
) |
| (0.09 |
) |
| (0.96 |
) |
| 7.60 |
|
| (0.02 |
) |
| 7.62 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Number of share used | | |
| to compute the | | |
| primary earnings per | | |
| share | | |
| 4,034,732 |
|
| 4,034,732 |
|
| 4,034,732 |
|
| 4,132,728 |
|
| 4,132,728 |
|
| 4,132,728 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Number of shares used | | |
| to compute the fully | | |
| diluted earnings per | | |
| share | | |
| 4,034,732 |
|
| 4,034,732 |
|
| 4,034,732 |
|
| 4,139,533 |
|
| 4,139,533 |
|
| 4,139,533 |
|
|
| |
| |
| |
| |
| |
| |
F - 38
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
D. |
Capital
and Reserves Reconciliation |
|
Share Capital
|
Premium on
shares
|
Capital surplus
Share-based payment
(in respect of options
of employee options)
|
Hedging
reserves
|
Capital
surplus from
translation
differences
|
Retained
Earnings
|
Total
|
|
NIS thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (unaudited) | | |
| | | |
| Israeli GAAP | | |
| 125,257 |
|
| 90,060 |
|
| 2,673 |
|
| - |
|
| (9,002 |
) |
| 217,925 |
|
| 426,913 |
|
| | | |
| Effect of Transition to IFRS: | | |
| Adjustments of investment in associated companies | | |
| by the equity method | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (98 |
) |
| (98 |
) |
| Classification of adjustments deriving from translations | | |
| of financial statements of foreign operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 8,341 |
|
| (8,341 |
) |
| - |
|
| Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| (63 |
) |
| 63 |
|
| - |
|
| - |
|
| Amortization of pre-paid expenses in respect | | |
| of lease of land | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (2,018 |
) |
| (2,018 |
) |
| Employee benefits net of tax effects | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (4,423 |
) |
| (4,423 |
) |
| Put option on affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,456 |
) |
| (1,456 |
) |
Financial expenses on capital note from
affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
| | - |
|
| (390 |
) |
| (390 |
) |
| Effect of classifying a doubtful debt provision as | | |
| specific after being classified as general | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (165 |
) |
| (165 |
) |
|
| |
| |
| |
| |
| |
| |
| |
| Under IFRS rules | | |
| 125,257 |
|
| 90,060 |
|
| 2,673 |
|
| (63 |
) |
| (598 |
) |
| 201,025 |
|
| 418,354 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 39
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
D. |
Capital
and Reserves Reconciliation (cont.) |
|
Share Capital
|
Premium on
shares
|
Capital surplus
Share-based
payment (in
respect of
options to
employees)
|
Hedging
reserves
|
Capital surplus
from translation
differences
|
Retained
Earnings
|
Total
|
|
NIS thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| Israeli GAAP | | |
| 125,267 |
|
| 301,695 |
|
| 3,397 |
|
| - |
|
| (5,166 |
) |
| 252,894 |
|
| 678,087 |
|
| | | |
| Effect of Transition to IFRS: | | |
| Adjustments of investment in associated companies | | |
| by the equity method | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,338 |
|
| 3,338 |
|
| Classification of adjustments deriving from | | |
| translations of financial statements of foreign | | |
| operations | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 8,341 |
|
| (8,341 |
) |
| - |
|
| Cash flow hedges | | |
| - |
|
| - |
|
| - |
|
| (635 |
) |
| 635 |
|
| - |
|
| - |
|
| Amortization of pre-paid expenses in respect of | | |
| lease of land | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,508 |
) |
| (1,508 |
) |
| Benefits to employees net of tax effects | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (4,326 |
) |
| (4,326 |
) |
| Put option on affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (3,901 |
) |
| (3,901 |
) |
| Financial expenses on capital note from | | |
| affiliated Company | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,560 |
) |
| (1,560 |
) |
| Effect of classifying a doubtful debt provision as | | |
| specific after being classified as general | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (159 |
) |
| (159 |
) |
|
| |
| |
| |
| |
| |
| |
| |
| Under IFRS rules | | |
| 125,267 |
|
| 301,695 |
|
| 3,397 |
|
| (635 |
) |
| 3,810 |
|
| 236,437 |
|
| 669,971 |
|
|
| |
| |
| |
| |
| |
| |
| |
F - 40
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information |
| |
In
accordance with generally accepted accounting principles in Israel, deferred tax assets
or liabilities were classified as current assets or liabilities depending on the
classification of the assets in respect of which they were created. |
| |
Pursuant
to IAS 1, deferred tax assets or liabilities are classified as non-current assets or
liabilities, respectively. |
| |
Consequently,
amounts of NIS 7,856 thousands, NIS 8,657 thousands and NIS 9,116 thousands which were
previously presented under accounts receivable were reclassified to deferred taxes under
non-current taxes as of January 1, 2007, March 31, 2007 and December 31, 2007
respectively. |
| |
(2) |
Land
leased from the Israel Land Administration |
| |
In
accordance with generally accepted accounting principles in Israel, land leased from the
Israel Land Administration, was classified as property, plant and equipment and included
in the amount of the capitalized leasing fees that were paid. The amount paid was not
depreciated. |
| |
Pursuant
to IAS 17, “Lease”, land lease arrangements, whereunder at the end of the
leasing period, the land is not transferred to the lessor, are classified as operating
lease arrangements. As a result, the Company’s lands in Hadera and in Naharia which
were leased from the Israel Land Administration, shall be presented in the Company’s
balance sheet as lease receivables in respect of lease, and amortized over the remaining
period of the lease. |
| |
The
company has lease rights in land from the Tel Aviv Municipality conforming to the
definition of investment real estate, that have been classified as operating leases and
not as investment real estate pursuant to IAS 40. |
| |
As
a result, as of January 1, 2007, the balance of prepaid expenses with respect to the
operating lease grew by the amount of approximately NIS 30,023 thousands and the balance
of fixed assets declined by the amount of approximately NIS 34,814 thousands. The change
was recorded in part to retained earnings, the amount of approximately NIS 1,867
thousands, and, in part, against deferred taxes in the amount of approximately NIS 2,923
thousands. |
| |
As
of March 31, 2007, the balance of prepaid expenses with respect to the operating lease
grew by the amount of approximately NIS 29,836 thousands and the balance of fixed assets
declined by the amount of approximately NIS 34,785 thousands. The change was recorded in
part to retained earnings, the amount of approximately NIS 2,018 thousands, and, in part,
against deferred taxes in the amount of approximately NIS 2,931 thousands. |
F - 41
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (cont.) |
| |
(2) |
Land
leased from the Israel Land Administration (cont.) |
| |
As
of December 31, 2007, the balance of prepaid expenses with respect to the operating lease
grew by the amount of approximately NIS 29,263 thousands and the balance of fixed assets
declined by the amount of approximately NIS 34,701 thousands. The change was recorded in
part to retained earnings, the amount of approximately NIS 1,508 thousands, and, in part,
against deferred taxes in the amount of approximately NIS 3,927 thousands. |
| |
The
amortization of the lease fees is reflected in the increase of general and administrative
expenses in the amount of approximately NIS 158 thousands for the period of three months
ended March 31, 2007, NIS thousands for the year ended December 31, 2007. Respectively,
and in an increase of approximately 644 in addition, tax expenses decreased in the amount
of approximately 8 thousands for the period of three months ended on March 31, 2007,
decreased by the amount of approximately NIS 1,004 thousands for the year ended December
31, 2007. |
| |
In
accordance with generally accepted accounting principles in Israel, the Company’s
liability for severance pay is calculated based on the recent salary of the employee
multiplied by the number of years of employment. |
| |
Pursuant
to IAS 19, the provision for severance pay is calculated according to an actuarial basis
taking into account the anticipated duration of employment, the value of time, the
expected salary increases until retirement and the possible retirement under conditions
not entitling severance pay. |
| |
In
addition, under Israeli GAAP, deposits made with regular policies or directors’insurance
policies which are not in the employee’s name, but in the name of the employer, were
also deducted from the company’s liability. |
| |
Under
IFRS, regular policies or directors’ insurance policies as aforesaid, which do not
meet the definition of plan assets under IAS 19, will be presented in the balance sheet
under a separate item and will not be deducted from the employer’s liability. |
| |
Most
of the Group’s employees are covered according to Section 14 of the Compensation
Law. Employee deposits are not reflected in the Company’s financial statements and
accordingly, no provision is necessary in the books. |
| |
However,
the Company is required to pay employees differences from entitlement to severance pay
and unutilized vacation pay. These liabilities are computed in accordance with the actuary’s
assessment based on an estimate of their utilization and redemption. |
F - 42
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
(3) |
Employee
Benefits (cont.) |
| |
In
addition, net liabilities in respect of benefits to employees after retirement, which
relate to defined benefit plans, are measured based on actuarial estimates and discounted
amounts. |
| |
According
to the international standards, a policy or executive insurance as above, which does not
conform to the definition of plan assets as per IAS 19, will be presented separately in
the balance sheet and not offset from the liabilities of the employer. |
| |
According
to the policy adopted by the Company, actuarial profits are recorded to retained earnings
but, due to lack of materiality, they have been recorded in full to operations. |
| |
As
a result, as of January 1, 2007, an increase in the net liabilities for employees’benefit
plans in the amount of NIS 5,563 thousands was created, and in addition, an increase in
the deferred tax asset was created in the amount of NIS 1,391 thousands. |
| |
As
of March 31, 2007, an increase in the net liabilities for employees’ benefit plans
in the amount of NIS 5,896 thousands was created, and in addition, an increase in the
deferred tax asset was created in the amount of NIS 1,474 thousands |
| |
As
of December 31, 2007, an increase in the net liabilities for employees’ benefit
plans in the amount of NIS 5,762 thousands was created, and in addition, an increase in
the deferred tax asset was created in the amount of NIS 1,436 thousands. |
| |
Payroll
expenses grew by the amount of approximately NIS 333 thousands for the period of three
months ended on March 31, 2007 and increased by the amount of approximately 199 thousands
for the year ended December 31, 2007, in addition, tax expenses decreased by the amount
of approximately NIS 84 thousands for the period of three months ended on March 31, 2007
and decreased by the amount of approximately 46 thousands for the year ended December 31,
2007. |
| |
Moreover,
assets with regard to employee benefits were classified from other current liabilities to
non current assets. The amount of approximately NIS 1,132 thousands, NIS 1,113 thousands
and NIS 1,179 thousands as of January 1, 2007, March 31, 2007 and December 31, 2007. |
F - 43
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
(4) |
Put
option for investee |
| |
As
part of an agreement dated November 21, 1999 with Mondi Business Paper (hereafter MBP,
formerly Neusiedler AG), Mondi Hadera purchased the operations of the Group in the area
of writing and typing paper and issued 50.1% of its shares to MBP. |
| |
As
part of this agreement, MBP was granted an option to sell its holdings in Mondi Hadera to
the company, at a price 20% lower than its value (as defined in the agreement) or $ 20
million less 20%, whichever is higher. According to oral understandings between persons
in the company and persons in MBP, which were formulated in proximity to signing the
agreement, MBP will exercise the option only in extremely extraordinary circumstances,
such as those which obstruct manufacturing activities in Israel over a long period. |
| |
In
view of the extended period which has passed since the date of such understandings and
due to changes in the management of MBP, occurring recently, the company has chosen to
take a conservative approach, and, accordingly, to reflect the economic value of the
option in the context of the transition to reporting according to international
standards. Under accounting principles generally accepted in Israel, it was not required
to give a value to the PUT option. According to the international standards, the value of
the option was computed and recognized as a liability, measured according to fair value,
with changes in fair value being recorded to operations in accordance with IAS 39. |
| |
As
of January 1, 2007, a liability with respect to the option for sale of the shares of the
investee in the amount of approximately NIS 1,612 thousands was presented. |
| |
As
of March 31, 2007, a liability with respect to the option for sale of the shares of the
subsidiary in the amount of approximately NIS 1,465 thousands was presented. |
| |
As
of December 31, 2007, a liability with respect to the option for sale of the shares of
the subsidiary in the amount of approximately NIS 3,901 thousands was presented. |
| |
Other
expenses declined by the amount of approximately NIS 147 thousands for the period of
three months ended March 31, 2007, and rose in the amount of approximately NIS 2,289
thousands for the year ended December 31, 2007. |
| |
(5) |
Financial
Income and Expenses |
| |
In
accordance with generally accepted accounting principles in Israel, financing income and
expenses are presented under the statement of income in one amount. |
| |
Pursuant
to IAS 1, financing income and expenses should be presented separately. |
| |
Consequently, financing expenses in
the amounts of NIS 7,859 thousands and NIS 31,766 thousands and financing income in
the amounts of NIS 1,275 thousands and NIS 10,648 thousands were presented in the
income statements for the three moths ended March 31, 2007 and the year ended December 31,
2007 respectively. |
F - 44
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
(6) |
Other
Income and Expenses |
| |
In
accordance with generally accepted accounting principles in Israel, other income and
expenses are presented in the income statements after the Operating profit. |
| |
Pursuant
to IAS 1, other income and expenses should be presented as a part of Gross profit or /
and as a part of Operating costs and expenses. |
| |
Consequently,
other expenses in the amounts of NIS 2,178 thousands were classified at the profit from
ordinary operations in the income statements for the year ended December 31, 2007. |
| |
In
accordance with generally accepted accounting principles in Israel, current tax assets or
liabilities were classified as other current assets or liabilities. |
| |
Pursuant
to IAS 1, current tax assets or liabilities are classified as separate balance in the
balance sheet. |
| |
Consequently,
amounts of NIS 19,824 thousands, NIS 8,176 thousands and NIS 908 thousands which were
previously presented under other current assets were reclassified to current tax assets
as of January 1, 2007, March 31, 2007 and December 31, 2007 respectively. |
| |
(8) |
Investment
in Associated Companies |
| |
In
the course of the second quarter, of 2007 Carmel, an associated company, made a
repurchase of its own shares, held by some of its minority shareholders.As a
result of this repurchase, the Company’s holdings in Carmel rose from 26.25% to
reach 36.21%.This increase in the holding rate led to a negative cost surplus of
NIS 4,923 thousands for the Company. According to Standard 20 (amended), this was
allocated to non-monetary items and will be realized in accordance with the realization
rate of these items. |
| |
During
2007, the Company included a sum of NIS 2,439 thousands in earnings from associated
companies, as a result of the realization of these items.According to the
directives of IAS 28 regarding the equity method of accounting, the balance of the
negative cost surplus in the amount of NIS 4,923 thousands will be allocated to the
Company’s share in earnings of associated companies during 2007, thereby increasing
the Company’s earnings for the year ended on December 31, 2007 by a sum of NIS 2,484
thousands.The Investments in Associated Companies item in the balance sheet will
also grow by the said sum. |
F - 45
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
(9) |
Provision
for doubtful debts |
| |
Under
generally accepted accounting principles in Israel, the provision for doubtful debts is
calculated both by means of a general provision on the basis of approximations and past
experience, ascertained by the company in accordance with the structure and nature of the
customers in the various companies, and also on the basis of a specific provision for
customers where the likelihood of collection was low in reliance on indicators in the
hand of the company and was made in a specific manner. |
| |
According
to international standards, the provision for doubtful debts is calculated solely on the
basis of a specific provision. |
| |
As
a result, the amount of the provision for doubtful debts increased as of January 1, 2007
by the amount of NIS 218 thousands and deferred taxes decreased by NIS 63 thousands. |
| |
The
amount of the provision for doubtful debts increased as of March 31, 2007 by the amount
of NIS 226 thousands and deferred taxes decreased by NIS 63 thousands. |
| |
The
amount of the provision for doubtful debts increased as of December 31, 2007 by the
amount of NIS 218 thousands and deferred taxes decreased by NIS 59 thousands. |
| |
(10) |
Capital
note issued to an investee |
| |
The
company’s balance sheet includes a capital note that was issued to an investee. Due
to the fact that no repayment date was set for the capital note, and in view of the fact
that the company is not a controlling interest in the investee, the capital note was
presented under Israeli standards at its nominal value, and financial expenses in respect
of same were not recorded in the statement of operations. |
| |
In
accordance with the directives of the international standards, the capital note was
classified as a financial liability under IAS 39. Therefore, the capital note will be
measured at unamortized cost, while using the effective interest method. |
| |
In
accordance with understandings reached between the company and the investee, that the
capital note will not be repayable prior to January 1, 2009, the unamortized cost of the
capital note in the financial statements of the company prepared according to the
directives of the international standards will be considered as if it were repayable on
such date. |
F - 46
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 10 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
F. |
Reliefs
with respect to the retroactive implementation of IFRS adopted by the Company |
| |
IFRS
1 includes several reliefs, in respect of which the mandatory retroactive implementation
does not apply. The Company elected to adopt in its opening balance sheet under IFRS as
of January 1, 2007 (hereinafter: “the opening balance sheet”) the reliefs with
regards to: |
| |
The
provisions of IFRS 2, which deals with share-based payments, have not been retroactively
implemented with respect to equity instruments granted before November 7, 2002 and which
have vested prior to the transition date. |
| |
(2) |
Translation
Differences |
| |
The
Company chose not to retroactively implement the provisions of IAS 21 regarding
translation differences accumulated as of January 1, 2007, with respect to overseas
operations. Consequently, the opening balance sheet does not include cumulative
translation differences in respect of overseas operations. |
| |
(3) |
Deemed
Cost For Items Of Fixed Assets |
| |
IFRS
1 allows to measure fixed assets, as of the transition date, or before it,
based on revaluation that was carried out in accordance to prior accounting
principles, as deemed cost, on the time of the revaluation, if the revaluation
was comparable in general, to the cost or to the cost net of accumulated
depreciation according to the IFRS standards, adjusted to changes such as
changes in the CPI. |
| |
Until
December 31, 2003 the Company adjusted its financial statements to the changes
in foreign rate of the U.S dollar, in accordance with opinion No. 36 of the
institute of Certified Accountancy in Israel. |
| |
For
the purpose of adapting the IFRS standards, the Company chose to implement the above said
relief allowed under IFRS 1, and to measure fixed assets items that were purchased or
established up to December 31, 2003 according to the affective cost for that date, based
on their adjusted value to the foreign exchange rate of the U.S dollar up to that date. |
F - 47
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
Schedule
Details of Subsidiaries and Associated Companies
At March 31, 2008
|
Percentage of direct and
indirect holding in shares
conferring equity and
voting rights
|
|
%
|
| |
|
|
|
|
|
| Main subsidiaries: |
|
|
| |
|
| | | |
| Amnir Recycling Industries Limited | | |
| 100.00 |
|
| Graffiti Office Supplies and Paper Marketing Ltd. | | |
| 100.00 |
|
| Attar Marketing Office Supplies Ltd. | | |
| 100.00 |
|
| American Israeli Paper Mills Paper Industry (1995) Ltd. | | |
| 100.00 |
|
| | | |
| Main associated companies: | | |
| Hogla-Kimberly Ltd. | | |
| 49.90 |
|
| Subsidiaries of Hogla-Kimberly Ltd.: | | |
| Hogla-Kimberly Marketing Limited | | |
| 49.90 |
|
| Molett Marketing Limited | | |
| 49.90 |
|
| Shikma For Personal Comfort Ltd. | | |
| 49.90 |
|
| Turketim Mallari Sanayi ve Ticaret A.S (KCTR) | | |
| 49.90 |
|
| Mondy Business Paper Hadera Ltd. | | |
| 49.90 |
|
| Subsidiary of Mondy Business Paper Hadera Ltd.: | | |
| Mondy Business Paper Hadera Marketing Ltd. | | |
| 49.90 |
|
| Carmel Container Systems Limited | | |
| 36.21 |
|
| Frenkel C.D. Limited** | | |
| 27.85 |
|
| * |
Not
including dormant companies. |
| ** |
Frenkel
C.D. Limited is partly held through Carmel Container Systems Limited (an associated
company); the holding in voting shares of C.D. Packaging Systems Limited is 27.79%. |
F - 48
| |
Enclosed
please find the financial reports of the following associated companies: |
| |
– |
Mondi
Business Paper Hadera Ltd. |
| |
– |
Carmel
Containers Systems Ltd. |
Exhibit 4
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
TABLE OF CONTENTS
The Board of Directors of
Mondi Business Paper Hadera Ltd.
| Re: |
Review
of Unaudited Condensed Interim Consolidated
Financial Statements for the Three
Months Ended March 31, 2008 |
Gentlemen:
At your request, we have reviewed the
condensed interim consolidated financial statements (“interim financial
statements”) of Mondi Business Paper Hadera Ltd. (“the Company”) and its
subsidiaries, as follows:
| – |
Balance
sheet as of March 31, 2008. |
| – |
Statement
of operations for the three months ended March 31, 2008. |
| – |
Statement
of changes in shareholders’ equity for the three months ended March 31, 2008. |
| – |
Statement
of cash flows for the three months ended March 31, 2008. |
Our review was conducted in
accordance with procedures prescribed by the Institute of Certified Public Accountants in
Israel. The procedures included, inter alia, reading the aforementioned interim financial
statements, reading the minutes of the shareholders’ meetings and meetings of the
board of directors and its committees, and making inquiries with the persons responsible
for financial and accounting affairs.
Since the review that was performed
is limited in scope and does not constitute an audit in accordance with generally accepted
auditing standards, we do not express an opinion on the aforementioned interim financial
statements.
In performing our review, nothing
came to our attention, which indicates that material adjustments are required to the
aforementioned interim financial statements for them to be deemed financial statements
prepared in conformity with international accounting standard No. 34 “Interim
Financial Reporting” and in accordance with Section D of the Israeli Securities
Regulations (Periodic and Immediate Reports), 1970.
Brightman Almagor & Co.
Certified Public Accountants
A Member Firm of Deloitte Touche Tohmatsu
April 30, 2008
M - 1
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(NIS in thousands)
|
March 31,
|
December 31,
|
|
2008
|
2007
|
2007
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Assets |
|
|
| |
|
| |
|
| |
|
| | | |
| Current assets | | |
| Cash and cash equivalents | | |
| 5,927 |
|
| - |
|
| 323 |
|
| Trade receivables | | |
| 202,162 |
|
| 196,503 |
|
| 190,935 |
|
| Other receivables | | |
| 3,757 |
|
| 5,067 |
|
| 2,395 |
|
| Inventories | | |
| 120,719 |
|
| 107,619 |
|
| 143,366 |
|
|
| |
| |
| |
| Total current assets | | |
| 332,565 |
|
| 309,189 |
|
| 337,019 |
|
|
| |
| |
| |
| | | |
| Non-current assets | | |
| Property, plant and equipment | | |
| 155,969 |
|
| 160,435 |
|
| 156,493 |
|
| Goodwill | | |
| 3,177 |
|
| 3,177 |
|
| 3,177 |
|
| Other Assets | | |
| 538 |
|
| - |
|
| 440 |
|
|
| |
| |
| |
| Total non-current assets | | |
| 159,684 |
|
| 163,612 |
|
| 160,110 |
|
|
| |
| |
| |
| Total assets | | |
| 492,249 |
|
| 472,801 |
|
| 497,129 |
|
|
| |
| |
| |
| | | |
| Equity and liabilities | | |
| | | |
| Current liabilities | | |
| Short-term bank credit | | |
| 102,087 |
|
| 117,147 |
|
| 101,760 |
|
| Current maturities of long-term bank loans | | |
| 14,456 |
|
| 10,302 |
|
| 14,387 |
|
| Capital notes to shareholders | | |
| 5,093 |
|
| 5,207 |
|
| 5,514 |
|
| Trade payables | | |
| 97,379 |
|
| 110,896 |
|
| 118,912 |
|
| American Israeli Paper Mills Group, net | | |
| 74,340 |
|
| 67,623 |
|
| 71,109 |
|
| Current tax liabilities | | |
| 506 |
|
| 84 |
|
| 169 |
|
| Other payables and accrued expenses | | |
| 26,388 |
|
| 23,679 |
|
| 21,239 |
|
|
| |
| |
| |
| Total current liabilities | | |
| 320,249 |
|
| 334,938 |
|
| 333,090 |
|
|
| |
| |
| |
| | | |
| Non-current liabilities | | |
| Long-term bank loans | | |
| 35,969 |
|
| 31,742 |
|
| 38,035 |
|
| Capital notes to shareholders | | |
| - |
|
| 6,486 |
|
| - |
|
| Deferred taxes | | |
| 20,781 |
|
| 11,215 |
|
| 18,677 |
|
| Accrued severance pay, net | | |
| 46 |
|
| 46 |
|
| 46 |
|
|
| |
| |
| |
| Total non-current liabilities | | |
| 56,796 |
|
| 49,489 |
|
| 56,758 |
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| Share capital | | |
| 1 |
|
| 1 |
|
| 1 |
|
| Premium | | |
| 43,352 |
|
| 43,352 |
|
| 43,352 |
|
| Capital reserves | | |
| 929 |
|
| 929 |
|
| 929 |
|
| Retained earnings | | |
| 70,922 |
|
| 44,092 |
|
| 62,999 |
|
|
| |
| |
| |
| | | |
| 115,204 |
|
| 88,374 |
|
| 107,281 |
|
|
| |
| |
| |
| Total equity and liabilities | | |
| 492,249 |
|
| 472,801 |
|
| 497,129 |
|
|
| |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| D. Muhlgay |
A. Solel |
R. Starkov |
| Financial Director |
General Manager |
Chairman of the Board of Directors |
Approval date of the interim
financial statements: April 30, 2008.
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
M - 2
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT
(NIS in thousands)
|
Three months ended
March 31,
|
Year ended
December 31,
|
|
2008
|
2007
|
2007
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Revenue |
|
|
| 205,141 |
|
| 188,339 |
|
| 770,032 |
|
| Cost of sales | | |
| 185,017 |
|
| 175,622 |
|
| 688,000 |
|
|
| |
| |
| |
| Gross profit | | |
| 20,124 |
|
| 12,717 |
|
| 82,032 |
|
|
| |
| |
| |
| | | |
| Operating costs and expenses | | |
| Selling expenses | | |
| 7,411 |
|
| 8,410 |
|
| 37,889 |
|
| General and administrative expenses | | |
| 3,122 |
|
| 2,605 |
|
| 10,532 |
|
| Other income | | |
| (45 |
) |
| - |
|
| (313 |
) |
|
| |
| |
| |
| | | |
| 10,488 |
|
| 11,015 |
|
| 48,108 |
|
|
| |
| |
| |
| | | |
| Operating profit | | |
| 9,636 |
|
| 1,702 |
|
| 33,924 |
|
| | | |
| Finance income | | |
| 4,929 |
|
| 679 |
|
| 5,408 |
|
| Finance costs | | |
| (4,128 |
) |
| (3,429 |
) |
| (13,822 |
) |
|
| |
| |
| |
| | | |
| 801 |
|
| (2,750 |
) |
| (8,414 |
) |
| | | |
| Profit (loss) before tax | | |
| 10,437 |
|
| (1,048 |
) |
| 25,510 |
|
| | | |
| Income tax (charge) credit | | |
| (2,514 |
) |
| 431 |
|
| (7,220 |
) |
|
| |
| |
| |
| | | |
| Profit (loss) for the period | | |
| 7,923 |
|
| (617 |
) |
| 18,290 |
|
|
| |
| |
| |
The accompanying notes are an integral
part of the condensed interim consolidated financial statements.
M - 3
MONDI BUSINESS PAPER HADERA LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(NIS in thousands)
|
Share
capital
|
Premium
|
Capital
reserves
|
Retained
earnings
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 31, 2008 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (Unaudited) | | |
| Balance - January 1, 2008 | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 62,999 |
|
| 107,281 |
|
| Profit for the period | | |
| - |
|
| - |
|
| - |
|
| 7,923 |
|
| 7,923 |
|
|
| |
| |
| |
| |
| |
| Balance - March 31, 2008 | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 70,922 |
|
| 115,204 |
|
|
| |
| |
| |
| |
| |
| | | |
| Three months ended March 31, 2007 | | |
| (Unaudited) | | |
| Balance - January 1, 2007 | | |
| 1 |
|
| 43,352 |
|
| - |
|
| 44,709 |
|
| 88,062 |
|
| Recognition in capital reserves due to presentation of | | |
| shareholders capital notes at fair value | | |
| - |
|
| - |
|
| 929 |
|
| - |
|
| 929 |
|
| Loss for the period | | |
| - |
|
| - |
|
| - |
|
| (617 |
) |
| (617 |
) |
|
| |
| |
| |
| |
| |
| Balance - March 31, 2007 | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 44,092 |
|
| 88,374 |
|
|
| |
| |
| |
| |
| |
| | | |
| Year ended December 31, 2007 | | |
| Balance - January 1, 2007 | | |
| 1 |
|
| 43,352 |
|
| - |
|
| 44,709 |
|
| 88,062 |
|
| Recognition in capital reserves due to presentation | | |
| of shareholders capital notes at fair value | | |
| - |
|
| - |
|
| 929 |
|
| - |
|
| 929 |
|
| Profit for the year | | |
| - |
|
| - |
|
| - |
|
| 18,290 |
|
| 18,290 |
|
|
| |
| |
| |
| |
| |
| Balance - December 31, 2007 | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 62,999 |
|
| 107,281 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
M - 4
MONDI BUSINESS PAPER HADERA LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(NIS in thousands)
|
Three
months
ended March 31,
|
Year ended
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
Unaudited
|
|
| |
|
|
|
|
|
|
|
| Cash flows - operating activities |
|
|
| |
|
| |
|
| |
|
| Operating profit for the period | | |
| 9,636 |
|
| 1,702 |
|
| 33,924 |
|
| Adjustments to reconcile operating profit to net | | |
| cash used in operating activities | | |
| (Appendix A) | | |
| 5,763 |
|
| (7,407 |
) |
| (14,732 |
) |
|
| |
| |
| |
| Net cash from (used in) operating activities | | |
| 15,399 |
|
| (5,705 |
) |
| 19,192 |
|
|
| |
| |
| |
| | | |
| Cash flows - investing activities | | |
| Acquisition of property plant and equipment | | |
| (1,779 |
) |
| (2,648 |
) |
| (8,458 |
) |
| Proceeds from sale of property plant and equipment | | |
| - |
|
| - |
|
| 376 |
|
|
| |
| |
| |
| Net cash used in investing activities | | |
| (1,779 |
) |
| (2,648 |
) |
| (8,082 |
) |
|
| |
| |
| |
| | | |
| Cash flows - financing activities | | |
| Short-term bank credit, net | | |
| 327 |
|
| 20,407 |
|
| 5,020 |
|
| Repayment of long-term bank loans | | |
| (2,028 |
) |
| (6,867 |
) |
| (15,927 |
) |
| Proceeds of long-term bank loans | | |
| - |
|
| - |
|
| 18,000 |
|
| Repayment of long-term capital | | |
| notes to shareholders | | |
| - |
|
| - |
|
| (5,676 |
) |
| Interest paid | | |
| (6,315 |
) |
| (5,202 |
) |
| (12,219 |
) |
|
| |
| |
| |
| Net cash from (used in) financing | | |
| activities | | |
| (8,016 |
) |
| 8,338 |
|
| (10,802 |
) |
|
| |
| |
| |
| | | |
| Increase (decrease) in | | |
| cash and cash equivalents | | |
| 5,604 |
|
| (15 |
) |
| 308 |
|
| Cash and cash equivalents at the | | |
| beginning of the financial period | | |
| 323 |
|
| 15 |
|
| 15 |
|
|
| |
| |
| |
| Cash and cash equivalents of the | | |
| end of the financial period | | |
| 5,927 |
|
| - |
|
| 323 |
|
|
| |
| |
| |
The accompanying notes are an integral
part of the condensed interim consolidated financial statements.
M - 5
MONDI BUSINESS PAPER HADERA LTD.
CONDENSED INTERIM CONSOLIDATED
APPENDICES TO STATEMENTS OF CASH FLOWS
(NIS in thousands)
| |
|
Three
months
ended March 31,
|
Year ended
December 31,
|
| |
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
| |
|
Unaudited
|
|
| |
|
|
|
|
| |
|
|
|
|
| A. |
Adjustments to reconcile operating profit (loss) |
|
|
| |
|
| |
|
| |
|
| |
to net cash provided by (used in) operating activities | | |
| |
| | |
| |
Finance income as states in income statements | | |
| 4,929 |
|
| 679 |
|
| 5,408 |
|
| |
Finance expenses as states in income statements | | |
| (4,128 |
) |
| (3,429 |
) |
| (13,822 |
) |
| |
Depreciation and amortization | | |
| 2,909 |
|
| 2,654 |
|
| 10,701 |
|
| |
Capital gain on disposal of property plant | | |
| |
and equipment | | |
| - |
|
| - |
|
| (313 |
) |
| |
Effect of exchange rate and linkage differences of | | |
| |
long-term bank loans | | |
| 31 |
|
| (201 |
) |
| 1,237 |
|
| |
Effect of exchange rate | | |
| |
differences of long-term | | |
| |
capital notes to shareholders | | |
| (421 |
) |
| (53 |
) |
| (556 |
) |
| |
Income tax paid | | |
| (73 |
) |
| (17 |
) |
| (121 |
) |
| |
| | |
| |
Changes in assets and liabilities: | | |
| |
Increase in trade receivables | | |
| (11,227 |
) |
| (23,329 |
) |
| (17,761 |
) |
| |
Decrease (increase) | | |
| |
in other receivables | | |
| (1,362 |
) |
| (757 |
) |
| 1,915 |
|
| |
Decrease (increase) | | |
| |
in inventories | | |
| 22,647 |
|
| 1,497 |
|
| (34,250 |
) |
| |
Increase (decrease) in trade payables | | |
| (22,139 |
) |
| 2,736 |
|
| 12,394 |
|
| |
Increase (decrease) in | | |
| |
American Israeli Paper Mills | | |
| |
Group, net | | |
| 3,231 |
|
| 4,816 |
|
| 8,302 |
|
| |
Increase in long term trade receivables | | |
| (98 |
) |
| - |
|
| (440 |
) |
| |
Increase (decrease) in other | | |
| |
payables and accrued expenses | | |
| 5,149 |
|
| 2,795 |
|
| 355 |
|
| |
|
| |
| |
| |
| |
| | |
| (552 |
) |
| (12,609 |
) |
| (26,951 |
) |
| |
|
| |
| |
| |
| |
| | |
| Interest paid |
| 6,315 |
|
| 5,202 |
|
| 12,219 |
|
| |
|
| |
| |
| |
| |
| | |
| 5,763 |
|
| (7,407 |
) |
| (14,732 |
) |
| |
|
| |
| |
| |
| |
| | |
| B. |
Non-cash activities | | |
| |
Acquisition of property plant and equipment on credit | | |
| 606 |
|
| 153 |
|
| (1,489 |
) |
| |
|
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
M - 6
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 1 |
– |
DESCRIPTION OF BUSINESS AND GENERAL |
| |
A. |
Description
of Business |
| |
Mondi
Business Paper Hadera Ltd. (“the Company”) was incorporated and commenced
operations on January 1, 2000. The Company and its Subsidiaries are engaged in the
production and marketing of paper, mainly in Israel. |
| |
The
Company is presently owned by Neusiedler Holdings BV. (“NHBV” or the “Parent
Company”) (50.1%) and American-Israeli Paper Mills Ltd. (“AIPM”) (49.9%). |
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
The Company |
- |
Mondi Business Paper Hadera Ltd. |
| |
|
| |
The Group |
- |
the Company and its Subsidiaries. |
| |
|
| |
Subsidiaries |
- |
companies in which the Company control, (as defined by IAS 27) directly or indirectly, and whose financial statements are fully consolidated with those of the Company. |
| |
|
| |
Related Parties |
- |
as defined by IAS 24. |
| |
|
| |
Interested Parties |
- |
as defined in the Israeli Securities Regulations (Presentation of Financial Statements), 1993. |
| |
|
| |
Controlling Shareholder |
- |
as defined in the Israeli Securities law and Regulations. 1968. |
| |
|
| |
NIS |
- |
New Israeli Shekel. |
| |
|
| |
CPI |
- |
the Israeli consumer price index. |
| |
|
| |
Dollar |
- |
the U.S. dollar. |
| |
|
| |
Euro |
- |
the United European currency. |
M - 7
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| |
A. |
Applying
international accounting standards (IFRS) |
| |
The
condensed interim financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance with
International Accounting Standard (IAS) 34 – “Interim Financial Reporting”. |
| |
The
principal accounting policies described in the following notes were applied in accordance
to the IFRS, in a consistent manner and to all previous reporting periods presented in
these condensed interim financial statements and to the opening balance sheet. |
| |
The
unaudited condensed interim consolidated financial statements as of March 31, 2008 and
for the three months then ended (“interim financial statements”) of the Company
and subsidiaries should be read in conjunction with the audited consolidated financial
statements of the Company and subsidiaries as of December 31, 2007 and for the year then
ended, including the notes thereto. |
| |
(2) |
First
time IFRS standards adoption |
| |
According
to standard No. 29 “Adoption of International Financial Reporting Standards”– IFRS
(“standard No. 29”), the Company applies International Financial Reporting
Standards and interpretations of the committee of the International Accounting Standard
Board (IASB) Starting January 1, 2008. |
| |
In
compliance with the mentioned above, the condensed interim financial statements, as of
March 31, 2008 and for the three months then ended, including all previous reporting
periods have been prepared under accounting policies consistent with International
Financial Reporting Standards and interpretations published by the International
Accounting Standard Board (IASB) and in accordance with International Accounting Standard
(IAS) 34 Interim Financial Reporting. |
| |
In
these condensed interim financial statements the Company applied IFRS 1 “First time
Adoption of International Financial Reporting Standards” (“IFRS No. 1”),
which determines instructions for first time implementation of IFRS. |
| |
According
to IFRS No. 1 the effective date for implementing IFRS standards is commencing January 1,
2007. |
M - 8
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
| |
A. |
Applying
international accounting standards (IFRS) (Cont.) |
| |
(2) |
First
time IFRS standards adoption (Cont.) |
| |
The
Company has applied in a retroactive manner the IFRS standards for all reporting periods
presented in the condensed interim financial statements. The Company implemented the IFRS
standards which have been published as of the preparation date of the condensed interim
Financial Statements and expected to be affective as of December 31, 2008. while applying
the said transition instructions the Company chose not to use any exemption allowed under
IFRS No. 1. |
| |
Until
the adoption of IFRS the Company conducted the Financial Reporting in accordance with the
Israeli GAAP. The annual financial statements as of December 31, 2007 and for the periods
then ended were prepared under the Israeli GAAP standards. The comparative financial
statements were represented in the condensed interim financial statements in accordance
to the IFRS standards. See note 7 for the relevant material adjustments between the
Israeli GAAP and the IFRS. |
| |
B. |
The
condensed Financial Statements were prepared in accordance with section D of
the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. |
| |
Until
December 31, 2003, Israel was considered a country in which hyper-inflation conditions
exist. Therefore, non-monetary balances in the balance sheet were presented on the
historical nominal amount and were adjusted to changes in the exchange rate of the U.S.
dollar. As of December 31, 2003 when the economy ceases to be hyper-inflationary and the
Company no longer adjusted its financial statements to the U.S. dollar, the adjusted
amounts as of this date were used as the historical costs. The financial statements were
edited on the basis of the historical cost, except for: |
| |
n |
Assets
and liabilities measured by fair value: financial assets measured by fair value recorded
directly as profit or loss. |
| |
n |
Non-current
assets, except for investment property measured by fair value classified as held for sale
are measured at the lower of their previous carrying amount and fair value less costs of
sale. |
| |
n |
Inventories
are stated at the lower of cost and net realizable value. |
| |
n |
Property,
plant and equipment and intangibles assets are presented at the lower of the cost less
accumulated amortizations and the recoverable amount. |
| |
n |
Liabilities
to employees as described in note 2N. |
M - 9
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
The
individual financial statements of each group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For
the purpose of the consolidated financial statements, the results and financial position
of each entity are expressed in the New Israeli Shekel (“NIS”), which is the
functional currency of the Company and the presentation currency for the consolidated
financial statements. |
| |
In
preparing the financial statements of the individual entities, transactions in currencies
other than the entity’s functional currency (foreign currencies) are recorded at the
rates of exchange prevailing at the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. (Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date
when the fair value was determined). Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. |
| |
Exchange
differences are recognised in profit or loss in the period in which they except for: |
| |
— |
exchange
differences on transactions entered into in order to hedge certain foreign currency risks. |
| |
— |
exchange
differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognized in the foreign currency translation
reserve and recognized in profit or loss on disposal of the net investment. |
| |
For
the purpose of presenting consolidated financial statements, the assets and liabilities
of the Group’s foreign operations are expressed in NIS using exchange rates
prevailing at the balance sheet date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates fluctuated significantly
during that period, in which case the exchange rates at the dates of the transactions are
used. |
| |
E. |
Basis
of consolidation |
| |
The
consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. |
M - 10
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
E. |
Basis
of consolidation (Cont.) |
| |
The
results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate. |
| |
Where
necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group. |
| |
All
intra-group transactions, balances, income and expenses are eliminated in full on
consolidation. |
| |
For
the effect of the issuance of IAS 27 (revised) “Consolidated and Separate Financial
Statements” see note 2T below. |
| |
Goodwill
arising on the acquisition of a subsidiary represents the excess of the cost of
acquisition over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities of the subsidiary or jointly controlled
entity recognised at the date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated impairment losses. |
| |
For
the purpose of impairment testing, goodwill is allocated to each of the Group’s
cash-generating units expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than the carrying amount of
the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the
basis of the carrying amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period. |
| |
On
disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal. |
| |
G. |
Property,
plant and equipment |
| |
Property,
plant and equipments are tangible items, which are held for use in the manufacture or
supply of goods or services, or leased to others, which are predicted to be used for more
than one period. The Company presents its property, plant and equipments items according
to the cost model. |
| |
Under
the cost method – a property, plant and equipment are presented at the balance sheet
at cost (net of any investment grants), less any accumulated depreciation and any
accumulated impairment losses. The cost includes the cost of the asset’s acquisition
as well as costs that can be directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by
management. |
M - 11
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
G. |
Property,
plant and equipment (Cont.) |
| |
Depreciation
is calculated using the straight-line method at rates considered adequate to depreciate
the assets over their estimated useful lives. Amortization of leasehold improvements is
computed over the shorter of the term of the lease, including any option period, where
the Company intends to exercise such option, or their useful life. |
| |
The
annual depreciation and amortization rates are: |
| |
|
%
|
|
|
|
|
|
| |
Leasehold improvements |
10 |
|
| |
Machinery and equipment |
5-20 |
(mainly 5%) |
| |
Motor vehicles |
15-20 |
|
| |
Office furniture and equipment |
6-33 |
|
| |
Scrap
value, depreciation method and the assets useful lives are being reviewed by management
in the end of every financial year. Changes are handled as a change of estimation and are
applied from here on. |
| |
The
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in income statement. |
| |
Borrowing
costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale, are assed to
the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale. |
| |
Investment
income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation. |
| |
I. |
Impairment
of tangible and intangible assets excluding goodwill |
| |
At
each balance sheet date, the Group reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Where a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable
and consistent allocation basis can be identified. |
M - 12
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
I. |
Impairment
of tangible and intangible assets excluding goodwill (Cont.) |
| |
Intangible
assets with indefinite useful lives and intangible assets not yet available for use are
tested for impairment annually, and whenever there is an indication that the asset may be
impaired. |
| |
Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss. |
| |
Where
an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revaluated
amount, in which case the reversal of the impairment loss is treated as a revaluation
increase. |
| |
Inventories
are assets held for sale in the ordinary course of business, in the process of production
for such sale or in the form of materials or supplies to be consumed in the production
process or in the rendering of services. |
| |
Inventories
are stated at the lower of cost and net realisable value. Cost of inventories includes
all the cost of purchase, direct labor, fixed and variable production over heads and
other cost that are incurred, in bringing the inventories to their present location and
condition. |
| |
Net
realisable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. |
| |
Cost
determined as follows: |
| |
|
|
|
| |
|
|
|
| |
Finished products |
- |
Based on actual production cost. |
| |
Raw, auxiliary |
|
| |
materials and other |
- |
Based on moving-average basis. |
M - 13
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Provisions
are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. |
| |
The
amount recognized as a provision is the best estimate of the consideration required to
settle the present obligation at the balance sheet date, taking into account the risks
and uncertainties surrounding the obligation.
Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows. |
| |
When
some or all of the economic benefits to settle a provision are expected to be recovered
from a third party, the receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the receivable can be measured
reliably. |
| |
Investments
are recognised and derecognised on trade date where the purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value. |
| |
Financial
assets are classified into the following specified categories: |
| |
— |
Financial
assets `at fair value through profit or loss' (FVTPL) |
| |
(2). |
Financial
assets at FVTPL |
| |
Financial
assets are classified as at FVTPL where the financial asset is either held for trading or
it is designated as at FVTPL. |
| |
A
financial asset is classified as held for trading if: |
| |
— |
it
has been acquired principally for the purpose of selling in the near
future; or |
| |
— |
it
is a part of an identified portfolio of financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or |
| |
— |
it
is a derivative that is not designated and effective as a hedging instrument. |
M - 14
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
L. |
Financial
assets (Cont.) |
| |
(2) |
Financial
assets at FVTPL (Cont.) |
| |
A
financial asset other than a financial asset held for trading may be designated as at
FVTPL upon initial recognition if: |
| |
— |
such
designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or |
| |
— |
the
financial asset forms part of a group of financial assets or financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Group’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or |
| |
— |
it
forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset
or liability) to be designated as at FVTPL. |
| |
Financial
assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in
profit or loss. The net gain or loss recognized in profit or loss incorporates any
dividend or interest earned on the financial asset. |
| |
(3) |
Loans
and receivables |
| |
Trade
receivables, loans, and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as loans and receivables. Loans and
receivables are measured at amortized cost using the effective interest method, less any
impairment. Interest income is recognized by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be immaterial. |
| |
(4) |
Impairment
of financial assets |
| |
Financial
assets, other than those at FVTPL, are assessed for indicators of impairment at each
balance sheet date. |
| |
Financial
assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted. |
| |
For
unlisted shares classified as AFS, a significant or prolonged decline in the fair value
of the security below its cost is considered to be objective evidence of impairment. |
| |
For
all other financial assets, including redeemable notes classified as AFS and finance
lease receivables, objective evidence of impairment could include: |
| |
— |
significant
financial difficulty of the issuer or counterparty; or |
| |
— |
default
or delinquency in interest or principal payments; or |
| |
— |
it
becoming probable that the borrower will enter bankruptcy or financial re-organisation. |
M - 15
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
L. |
Financial
assets (Cont.) |
| |
(4) |
Impairment
of financial assets (Cont.) |
| |
For
financial assets carried at amortized cost, the amount of the impairment is the
difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original effective interest
rate. |
| |
The
carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. |
| |
When
a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognised
in profit or loss. |
| |
With
the exception of AFS equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss
is reversed through profit or loss to the extent that the carrying amount of the
investment at the date the impairment is reversed does not exceed what the amortized cost
would have been had the impairment not been recognised. |
| |
In
respect of AFS equity securities, impairment losses previously recognised through profit
or loss are not reversed through profit or loss. Any increase in fair value subsequent to
an impairment loss is recognised directly in equity. |
| |
M. |
Other
financial liabilities |
| |
Other
financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs. Other financial liabilities are subsequently measured at amortized
cost using the effective interest method, with interest expense recognized on an
effective yield basis. |
| |
The
effective interest method is a method of calculating the amortized cost of a financial
liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through
the expected life of the financial liability, or, where appropriate, a shorter period. |
| |
CPI-linked
liabilities
The Company has liabilities that are linked to the Consumer Price Index
(hereinafter –the CPI), which are not measured at fair value under the statement of
income. The Company determines the effective interest rate in respect of these
liabilities as a real rate with the addition of linkage differences in line with actual
changes in the CPI until the balance sheet date. This is also the approach used under
generally accepted accounting principles in Israel. |
| |
As
of the balance sheet date, the Company has CPI-linked financial liabilities in the total
sum of NIS 19,418 thousand. |
M - 16
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
M. |
Other
financial liabilities (Cont.) |
| |
CPI-linked
assets and liabilities (Cont.) |
| |
There
is another interpretation of IFRS, under which the effective interest rate in respect of
these assets and liabilities should include the anticipated inflation up to the relevant
repayment dates (instead of accumulation of real interest plus linkage differences in
line with changes in the CPI until the balance sheet date). |
| |
The
vast majority of loans and long-term and medium-term financing arrangements in Israel are
linked to the CPI. Therefore, the Israeli Institute for Accounting Standards has
submitted a request to the International Financial Reporting Interpretation Committee
(IFRIC) to clarify the applicable method in the measurement of the effective interest
rate of such assets and liabilities under IFRS. |
| |
The
Committee’s response in this matter and the implications thereof cannot be reliably
predicted. If the Committee’s response indicates that the method used in Israel (and
which was implemented in these financial statements/ as described in this note) is not
appropriate in accordance with IFRS, the Company will have to change the method of
measurement of these assets and liabilities and it may have to do so by way of restating
its financial statements. Under the present circumstances, the Company is unable to
reliably measure the potential impact on its financial statements in such a case. |
| |
N. |
Derivative
financial instruments |
| |
The
Group enters into a variety of derivative financial instruments to manage its exposure to
foreign exchange rate risk, including foreign exchange forward contracts. |
| |
Derivatives
are initially recognized at fair value at the date a derivative contract is entered into
and are subsequently remeasured to their fair value at each balance sheet date. The
resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. The Group
designates certain derivatives as hedges of highly probable forecast transactions or
hedges of foreign currency risk of firm commitments (cash flow hedges), |
| |
A
derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities. |
M - 17
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
N. |
Derivative
financial instruments (Cont.) |
| |
The
Group designates certain hedging instruments, which include derivatives and
non-derivatives in respect of foreign currency risk, as cash flow hedges. |
| |
At
the inception of the hedge relationship, the entity documents the relationship between
the hedging instrument and the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective in offsetting changes in fair
values or cash flows of the hedged item. |
| |
Cash flow
hedges
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are deferred in equity. The gain or loss
relating to the ineffective portion is recognised immediately in profit or loss, and is
included in the “finance income and finance expense” lines of the income
statement. Amounts deferred in equity are recycled in profit or loss in the periods when
the hedged item is recognised in profit or loss, in the same line of the income statement
as the recognised hedged item. However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset or a non-financial liability, the
gains and losses previously deferred in equity are transferred from equity and included
in the initial measurement of the cost of the asset or liability. |
| |
Hedge
accounting is discontinued when the Group revokes the hedging relationship, the hedging
instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in equity at that time remains in equity
and is recognised when the forecast transaction is ultimately recognised in profit or
loss. When a forecast transaction is no longer expected to occur, the cumulative gain or
loss that was deferred in equity is recognised immediately in profit or loss. |
| |
Revenue
is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances. |
| |
Revenue
from the sale of goods is recognised when all the following conditions are satisfied: |
| |
— |
The
Group has transferred to the buyer the significant risks and rewards of ownership
of the goods; |
| |
— |
The
Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold |
| |
— |
The
amount of revenue can be measured reliably; |
| |
— |
It
is probable that the economic benefits associated with the transaction will flow
to the entity; and |
| |
— |
The
costs incurred or to be incurred in respect of the transaction can be measured reliably. |
M - 18
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
O. |
Revenue
recognition (Cont.) |
| |
Interest
revenue is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s
net carrying amount. |
| |
Operating
lease payments are recognised as an expense on a straight-line basis over the lease term. |
| |
Income
tax expense represents the sum of the tax currently payable and deferred tax. |
| |
The
tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance sheet date. |
| |
Deferred
tax is recognised on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and
deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. |
| |
The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered. |
M - 19
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the balance sheet date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. |
| |
Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis. |
| |
(3) |
Current
and deferred tax for the period |
| |
Current
and deferred tax are recognised as an expense or income in profit or loss, except when
they relate to items credited or debited directly to equity, in which case the tax is
also recognised directly in equity, or where they arise from the initial accounting for a
business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or in determining the excess of the acquirer’s
interest in the net fair value of the acquirer’s identifiable assets, liabilities
and contingent liabilities over the cost of the business combination. |
| |
R. |
Retirement
benefit costs |
| |
Payments
to defined contribution retirement benefit schemes are charged as an expense as they fall
due and include early retirement pay, severance pay and pensioner’s gifts. |
| |
For
defined benefit schemes, the cost of providing benefits is determined using the Projected
Unit Credit Method, with actuarial valuations being carried out at each balance sheet
date. Actuarial gains and losses are recognised in full in the period in which they
occur. They are recognised outside profit or loss and presented in the statement of
recognised income and expense. |
M - 20
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
S. |
Exchange
Rates and Linkage Basis |
| |
Following
are the changes in the representative exchange rates of the Euro and the U.S. dollar
vis-a-vis the NIS and in the Israeli Consumer Price Index (“CPI”): |
| |
As of:
|
Representative
exchange rate
of the Euro
(NIS per €1)
|
Representative
exchange rate
of the dollar
(NIS per $1)
|
CPI
"in respect of"
(in points)
|
| |
|
|
|
|
| |
|
|
March 31, 2008 |
|
|
| 5.617 |
|
| 3.553 |
|
| 106.50 |
|
| | | |
March 31, 2007 | | |
| 5.534 |
|
| 4.155 |
|
| 102.66 |
|
| | | |
December 31, 2007 | | |
| 5.6592 |
|
| 3.846 |
|
| 106.40 |
|
| |
Increase (decrease) during the:
|
%
|
%
|
%
|
| |
|
|
|
|
| |
|
|
Three months ended March 31, 2008 |
|
|
| (0.75 |
) |
| (7.62 |
) |
| 0.09 |
|
| | | |
Three months ended March 31, 2007 | | |
| (0.54 |
) |
| (1.66 |
) |
| (0.24 |
) |
| | | |
Year ended December 31, 2007 | | |
| 1.71 |
|
| (8.97 |
) |
| 3.39 |
|
| |
T. |
Adoption
of new and revised Standards and interpretations |
| |
(1) |
Standards
and Interpretations which are effective and have been applied in these
financial statements as of March 31, 2008 and for the three months then
ended. |
| |
Three
Interpretations issued by the International Financial Reporting Interpretations Committee
are effective for the current period, these are: |
| |
|
|
|
| |
|
|
|
| |
— |
IFRIC 11 |
IFRS 2: Group and Treasury Share Transactions (effective 1 March 2007); |
| |
|
|
|
| |
— |
IFRIC 12 |
Service Concession Arrangements (effective 1 January 2008); |
| |
|
|
|
| |
— |
IFRIC 14 |
IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective 1 January 2008). |
| |
The
adoption of the Interpretations has not led to any material changes to the Group’s
accounting policies. |
M - 21
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
T. |
Adoption
of new and revised Standards (Cont.) |
| |
(2) |
Standards
and Interpretations which have not been applied in these financial statements were
in issue but not yet effective |
| |
At
the date of authorization of these interim financial statements, other than the Standards
and Interpretations adopted by the Group in advance of their effective dates the
following Interpretations were in issue but not yet effective: |
| |
— |
IAS
23 (Revised) – Borrowing Costs (effective for accounting periods beginning on or
after 1 January 2009); |
| |
— |
IAS
27 (Revised) – Consolidated and Separate Financial Statements (effective for
accounting periods beginning on or after 1 January 2010); |
| |
— |
IAS
32 and IAS 1 – Amendments for Puttable Instruments and Obligations Arising on
Liquidation (effective for accounting periods beginning on or after 1 January 2009); |
| |
— |
IFRS
2 – Vesting Conditions and Cancellations (effective for accounting periods beginning
on or after 1 January 2009); |
| |
— |
IFRS
3 - BUSINESS COMBINATIONS (effective for accounting periods beginning on or after 1
July 2009); |
| |
— |
IFRS
8 - Operating Segments (effective for accounting periods beginning on or after 1
January 2009); and |
| |
— |
IFRIC
13 – Customer Loyalty Programmes (effective for accounting periods beginning on or
after 1 July 2008). |
| NOTE 3 |
– |
CRITICAL
ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESRIMATION UNCERTAITY |
| |
In
the application of the Group’s accounting policies, which are described in Note 2,
the directors are required to make judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these
estimates. |
| |
The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods. |
| |
(2) |
Critical
judgments in applying accounting policies |
| |
The
following are the critical judgments, apart from those involving estimations (see below),
that the directors have made in the process of applying the entity’s accounting
policies and that have the most significant effect on the amounts recognised in financial
statements. |
M - 22
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 3 |
– |
CRITICAL
ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESRIMATION UNCERTAITY (Cont.) |
| |
(2) |
Critical
judgments in applying accounting policies |
| |
In
making their judgment, the directors considered the detailed criteria for the recognition
of revenue from the sale of goods set out in IAS 18 Revenue and, in particular, whether
the Group had transferred to the buyer the significant risks and rewards of ownership of
the goods. Following the detailed quantification of the Group’s liability in respect
of rectification work, and the agreed limitation on the customer’s ability to
require further work or to require replacement of the goods, the directors are satisfied
that the significant risks and rewards have been transferred and that recognition of the
revenue in the current year is appropriate, in conjunction with the recognition of an
appropriate provision for the rectification costs. |
| |
Useful
lives of property, plant and equipment |
| |
As
described at 2G above, the Group reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period. |
| |
Determining
whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation
requires the management to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate present value.
The carrying amount of goodwill at the balance sheet date was NIS 3,177 thousand. |
| |
(3) |
Key
sources of estimation uncertainty |
| |
The
following are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the balance sheet date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next
financial year. |
| |
Employee
retirement benefits |
| |
The
present value of the employee retirement benefits is based on an actuarial valuation
using many assumptions inter alia the capitalization rate. Changes in the assumptions may
influence the book value of the liabilities for retirement benefits. The Company
determines the capitalization rate once a year based on the basis of the capitalization
rate of government bonds. Other key assumptions are based on the current prevailing terms
in the market and the past experience of the Company (see also note 2N above). |
M - 23
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 5 |
– |
RELATED
PARTIES AND INTERESTED PARTIES |
| |
A. |
Balances
with Related Parties |
| |
|
March 31, |
December 31, |
|
|
2008
|
2007
|
2007
|
|
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
Trade receivables - related parties |
|
|
| - |
|
| 683 |
|
| - |
|
| |
|
| |
| |
| |
| | | |
Trade payables - AIPM | | |
| 74,340 |
|
| 67,623 |
|
| 71,109 |
|
| |
|
| |
| |
| |
| | | |
Trade payables - related parties | | |
| 4,266 |
|
| 11,715 |
|
| 38,090 |
|
| |
|
| |
| |
| |
| | | |
Other payables and accrued expenses - related parties | | |
| - |
|
| 27 |
|
| 34 |
|
| |
|
| |
| |
| |
| | | |
Capital notes to shareholders | | |
| 6,022 |
|
| 12,622 |
|
| 6,443 |
|
| |
|
| |
| |
| |
| |
B. |
Transactions
with Related Parties |
|
|
Three months ended
March 31,
|
Year ended
December 31,
|
|
|
2008
|
2007
|
2007
|
|
|
(Unaudited)
|
|
| |
|
|
|
|
| |
|
|
Sales to related parties |
|
|
| 3,359 |
|
| 9,668 |
|
| 26,602 |
|
| |
|
| |
| |
| |
| | | |
| | | |
Cost of sales | | |
| 21,816 |
|
| 30,254 |
|
| 106,226 |
|
| |
|
| |
| |
| |
| | | |
| | | |
Selling expenses, net (Participation in selling expenses, net) | | |
| - |
|
| 34 |
|
| 64 |
|
| |
|
| |
| |
| |
| | | |
| | | |
General and administrative expenses | | |
| 360 |
|
| 413 |
|
| 1,998 |
|
| |
|
| |
| |
| |
| | | |
| | | |
Financing expenses (income), net | | |
| 660 |
|
| 1,141 |
|
| 2,880 |
|
| |
|
| |
| |
| |
| |
C. |
(1) |
The Company leases its premises from AIPM and receives services (including
energy, water, maintenance and professional services) under agreements,
which are renewed every year. |
| |
(2) |
The
Group is obligated to pay commissions to NAG. |
M - 24
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 6 |
– |
INCOME
TAXES (TAXES BENEFITS) |
| |
(1) |
The
effective tax rate for the three months ended March 31, 2008 is 24%, due to
deferred taxes in the sum of NIS 250 thousand in regards to prior years
loss. |
| |
(2) |
Under
the inflationary adjustments law, results for tax purposes are measured in
real terms, having regard to the changes in the Israeli CPI. The Company
and its subsidiaries are taxed under this law. |
| |
On
February 26, 2008, the Knesset ratified the third reading of the Income Tax Law (“Inflation
Adjustments”) (Amendment 20) (Limitation of Term of Validity) –2008
(hereinafter: “The Amendment”), pursuant to which the application of the
inflationary adjustment law will terminate in tax year 2007 and as of tax year 2008, the
law will no longer apply, other than transition regulations whose intention it is to
prevent distortions in tax calculations. |
| |
According
to the amendment, in tax year 2008 and thereafter, the adjustment of revenues for tax
purposes will no longer be considered a real-term basis for measurement. Moreover, the
linkage to the CPI of the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be adjusted until the
CPI at the end of 2007 and their linkage to the CPI will end as of that date. |
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS |
| |
Following
the publication of Accounting Standard No. 29, “the Adoption of International
Financial Reporting Standards (IFRS)” in July 2006, the Company adopted IFRS
starting January 1, 2008. |
| |
Pursuant
to the provisions of IFRS1, which deals with the first-time adoption of IFRS, and
considering the date in which the Company elected to adopt these standards for the first
time, the financial statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31, 2008, and for the year
ended on that date. The date of transition of the Company to reporting under IFRS, as it
is defined in IFRS 1, is January 1, 2007 (hereinafter: “the transition date”),
with an opening balance sheet as of January 1, 2007 (hereinafter: “Opening Balance”).
The Company’s interim financial statements for 2008 will also be drawn up in
accordance with IFRS, and shall include comparative figures for the year. |
M - 25
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
Under
the opening balance sheet, the Company performed the following reconciliations: |
| |
— |
Recognition
of all assets and liabilities whose recognition is required by IFRS. |
| |
— |
De-recognition
of assets and liabilities if IFRS do not permit such recognition. |
| |
— |
Classification
of assets, liabilities and components of equity according to IFRS. |
| |
— |
Application
of IFRS in the measurement of all recognized assets and liabilities. |
| |
IFRS
1 states that all IFRS shall be adopted retroactively for the opening balance sheet. At
the same time, IFRS 1 includes 14 reliefs, in respect of which the mandatory retroactive
implementation does not apply. The Company chose not to implement any relief. |
| |
Changes
in the accounting policy which the Company implemented retroactively in the opening
balance sheet under IFRS, compared to the accounting policy in accordance with Generally
Accepted Accounting Principles in Israel, were recognized directly under Retained
Earnings or another item of Shareholders’ Equity, as the case may be.
This note is
formulated on the basis of International Financial Reporting Standards and the notes
thereto as they stand today, that have been published and shall enter into force or that
may be adopted earlier as at the Group’s first annual reporting date according to
IFRS, December 31, 2008. Pursuant to the above, the Company’s management has made
assumptions regarding the anticipated financial reporting regulations that are expected
to be implemented when the first annual financial statements are prepared according to
IFRS, for the year ended December 31, 2008. |
| |
The
IFRS standards that will be in force or that may be adopted in the financial
statements for the year ended December 31, 2008 are subject to changes and the
publication of additional clarifications. Consequently, the financial reporting
standards that shall be applied to the represented periods, will be determined finally
only upon preparation of the first financial statements according to IFRS, as at December
31, 2008. |
| |
Listed
below are the Company’s consolidated balance sheets as of January 1, 2007, March 31,
2007 and December 31, 2007, the consolidated statement of income and the shareholders’ equity
for the year ended on December 31, 2007 and the three months ended March 31, 2007
prepared in accordance with International Accounting Standards. In addition, the table
presents the material reconciliations required for the transition from reporting under
Israeli GAAP to reporting under IFRS. |
M - 26
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS |
|
December 31, 2007
|
March 31, 2007
|
|
Israeli
GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
NIS in thousands
|
NIS in thousands
|
|
|
|
|
(Unaudited)
|
| |
|
|
|
|
|
|
| Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| Current assets | | |
| Cash and cash equivalents | | |
| 323 |
|
| - |
|
| 323 |
|
| - |
|
| - |
|
| - |
|
| Trade receivables | | |
| 190,935 |
|
| - |
|
| 190,935 |
|
| 196,503 |
|
| - |
|
| 196,503 |
|
| Other receivables | | |
| 13,652 |
|
| (11,257 |
) |
| 2,395 |
|
| 7,834 |
|
| (2,767 |
) |
| 5,067 |
|
| Inventories | | |
| 143,366 |
|
| - |
|
| 143,366 |
|
| 107,619 |
|
| - |
|
| 107,619 |
|
|
| |
| |
| |
| |
| |
| |
| Total current assets | | |
| 348,276 |
|
| (11,257 |
) |
| 337,019 |
|
| 311,956 |
|
| (2,767 |
) |
| 309,189 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Non-current assets | | |
| Property, plant and equipment | | |
| 156,493 |
|
| - |
|
| 156,493 |
|
| 160,435 |
|
| - |
|
| 160,435 |
|
| Goodwill | | |
| 3,177 |
|
| - |
|
| 3,177 |
|
| 3,177 |
|
| - |
|
| 3,177 |
|
| Long term trade receivables | | |
| 440 |
|
| - |
|
| 440 |
|
| - |
|
| - |
|
| - |
|
|
| |
| |
| |
| |
| |
| |
| Total non-current assets | | |
| 160,110 |
|
| - |
|
| 160,110 |
|
| 163,612 |
|
| - |
|
| 163,612 |
|
|
| |
| |
| |
| |
| |
| |
| Total assets | | |
| 508,386 |
|
| (11,257 |
) |
| 497,129 |
|
| 475,568 |
|
| (2,767 |
) |
| 472,801 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Equity and liabilities | | |
| Current liabilities | | |
| Short-term bank credit | | |
| 101,760 |
|
| - |
|
| 101,760 |
|
| 117,147 |
|
| - |
|
| 117,147 |
|
| Current maturities of long-term | | |
| bank loans | | |
| 14,387 |
|
| - |
|
| 14,387 |
|
| 10,302 |
|
| - |
|
| 10,302 |
|
| Capital notes to shareholders | | |
| 5,514 |
|
| - |
|
| 5,514 |
|
| 5,207 |
|
| - |
|
| 5,207 |
|
| Trade payables | | |
| 118,912 |
|
| - |
|
| 118,912 |
|
| 110,896 |
|
| - |
|
| 110,896 |
|
| American Israeli Paper Mills | | |
| Group, net | | |
| 71,109 |
|
| - |
|
| 71,109 |
|
| 67,623 |
|
| - |
|
| 67,623 |
|
| Current tax liabilities | | |
| - |
|
| 169 |
|
| 169 |
|
| - |
|
| 84 |
|
| 84 |
|
| Other payables and accrued | | |
| expenses | | |
| 21,408 |
|
| (169 |
) |
| 21,239 |
|
| 23,763 |
|
| (84 |
) |
| 23,679 |
|
|
| |
| |
| |
| |
| |
| |
| Total current liabilities | | |
| 333,090 |
|
| - |
|
| 333,090 |
|
| 334,938 |
|
| - |
|
| 334,938 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Non-current liabilities | | |
| Long-term bank loans | | |
| 38,035 |
|
| - |
|
| 38,035 |
|
| 31,742 |
|
| - |
|
| 31,742 |
|
| Capital notes to shareholders | | |
| - |
|
| - |
|
| - |
|
| 6,486 |
|
| - |
|
| 6,486 |
|
| Deferred taxes | | |
| 29,934 |
|
| (11,257 |
) |
| 18,677 |
|
| 13,982 |
|
| (2,767 |
) |
| 11,215 |
|
| Accrued severance pay, net | | |
| 46 |
|
| - |
|
| 46 |
|
| 46 |
|
| - |
|
| 46 |
|
|
| |
| |
| |
| |
| |
| |
| Total non-current liabilities | | |
| 68,015 |
|
| (11,257 |
) |
| 56,758 |
|
| 52,256 |
|
| (2,767 |
) |
| 49,489 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Capital and reserves | | |
| Share capital | | |
| 1 |
|
| - |
|
| 1 |
|
| 1 |
|
| - |
|
| 1 |
|
| Premium | | |
| 43,352 |
|
| - |
|
| 43,352 |
|
| 43,352 |
|
| - |
|
| 43,352 |
|
| Capital reserves | | |
| 929 |
|
| - |
|
| 929 |
|
| 929 |
|
| - |
|
| 929 |
|
| Retained earnings | | |
| 62,999 |
|
| - |
|
| 62,999 |
|
| 44,092 |
|
| - |
|
| 44,092 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| 107,281 |
|
| - |
|
| 107,281 |
|
| 88,374 |
|
| - |
|
| 88,374 |
|
|
| |
| |
| |
| |
| |
| |
| Total equity and liabilities | | |
| 508,386 |
|
| (11,257 |
) |
| 497,129 |
|
| 475,568 |
|
| (2,767 |
) |
| 472,801 |
|
|
| |
| |
| |
| |
| |
| |
M - 27
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS: (Cont.) |
|
January 1, 2007
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
| Assets |
|
|
| |
|
| |
|
| |
|
| | | |
| Current assets | | |
| | | |
| Cash and cash equivalents | | |
| 15 |
|
| - |
|
| 15 |
|
| Trade receivables | | |
| 173,174 |
|
| - |
|
| 173,174 |
|
| Other receivables | | |
| 6,686 |
|
| (2,376 |
) |
| 4,310 |
|
| Inventories | | |
| 109,116 |
|
| - |
|
| 109,116 |
|
|
| |
| |
| |
| Total current assets | | |
| 288,991 |
|
| (2,376 |
) |
| 286,615 |
|
|
| |
| |
| |
| | | |
| Non-current assets | | |
| Property, plant and equipment | | |
| 160,288 |
|
| - |
|
| 160,288 |
|
| Goodwill | | |
| 3,177 |
|
| - |
|
| 3,177 |
|
|
| |
| |
| |
| Total non-current assets | | |
| 163,465 |
|
| - |
|
| 163,465 |
|
|
| |
| |
| |
| Total assets | | |
| 452,456 |
|
| (2,376 |
) |
| 450,080 |
|
|
| |
| |
| |
| | | |
| Equity and liabilities | | |
| | | |
| Current liabilities | | |
| Short-term bank credit | | |
| 96,740 |
|
| - |
|
| 96,740 |
|
| Current maturities of long-term bank loans | | |
| 15,243 |
|
| - |
|
| 15,243 |
|
| Capital notes to shareholders | | |
| 5,231 |
|
| - |
|
| 5,231 |
|
| Trade payables | | |
| 108,007 |
|
| - |
|
| 108,007 |
|
| American Israeli Paper Mills Group, net | | |
| 62,807 |
|
| - |
|
| 62,807 |
|
| Current tax liabilities | | |
| - |
|
| 76 |
|
| 76 |
|
| Other payables and accrued expenses | | |
| 20,960 |
|
| (76 |
) |
| 20,884 |
|
|
| |
| |
| |
| Total current liabilities | | |
| 308,988 |
|
| - |
|
| 308,988 |
|
|
| |
| |
| |
| | | |
| Non-current liabilities | | |
| Long-term bank loans | | |
| 33,869 |
|
| - |
|
| 33,869 |
|
| Capital notes to shareholders | | |
| 6,515 |
|
| - |
|
| 6,515 |
|
| Deferred taxes | | |
| 14,047 |
|
| (2,376 |
) |
| 11,671 |
|
| Accrued severance pay, net | | |
| 46 |
|
| - |
|
| 46 |
|
|
| |
| |
| |
| Total non-current liabilities | | |
| 54,477 |
|
| (2,376 |
) |
| 52,101 |
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| Share capital | | |
| 1 |
|
| - |
|
| 1 |
|
| Premium | | |
| 43,352 |
|
| - |
|
| 43,352 |
|
| Capital reserves | | |
| 929 |
|
| - |
|
| 929 |
|
| Retained earnings | | |
| 44,709 |
|
| - |
|
| 44,709 |
|
|
| |
| |
| |
| | | |
| 88,991 |
|
| - |
|
| 88,991 |
|
|
| |
| |
| |
| Total equity and liabilities | | |
| 452,456 |
|
| (2,376 |
) |
| 450,080 |
|
|
| |
| |
| |
M - 28
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
C. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS |
|
Three months ended March 31, 2007
|
Year ended December 31, 2007
|
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
|
NIS in thousands
|
NIS in thousands
|
|
(Unaudited)
|
|
|
| |
|
|
|
|
|
|
| Revenue |
|
|
| 188,339 |
|
| - |
|
| 188,339 |
|
| 770,032 |
|
| - |
|
| 770,032 |
|
| Cost of sales | | |
| 175,622 |
|
| - |
|
| 175,622 |
|
| 688,000 |
|
| - |
|
| 688,000 |
|
|
| |
| |
| |
| |
| |
| |
| Gross profit | | |
| 12,717 |
|
| - |
|
| 12,717 |
|
| 82,032 |
|
| - |
|
| 82,032 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating costs and expenses | | |
| Selling expenses | | |
| 8,410 |
|
| - |
|
| 8,410 |
|
| 37,889 |
|
| - |
|
| 37,889 |
|
| General and administrative | | |
| expenses | | |
| 2,605 |
|
| - |
|
| 2,605 |
|
| 10,532 |
|
| - |
|
| 10,532 |
|
| Other income | | |
| |
|
| - |
|
| |
|
| (313 |
) |
| - |
|
| (313 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| 11,015 |
|
| - |
|
| 11,015 |
|
| 48,108 |
|
| - |
|
| 48,108 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating profit | | |
| 1,702 |
|
| - |
|
| 1,702 |
|
| 33,924 |
|
| - |
|
| 33,924 |
|
| | | |
| Finance income | | |
| - |
|
| 679 |
|
| 679 |
|
| - |
|
| 5,408 |
|
| 5,408 |
|
| Finance costs | | |
| (2,750 |
) |
| (679 |
) |
| (3,429 |
) |
| (8,414 |
) |
| (5,408 |
) |
| (13,822 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| | | |
| Profit (loss) before tax | | |
| (1,048 |
) |
| - |
|
| (1,048 |
) |
| 25,510 |
|
| - |
|
| 25,510 |
|
| | | |
| Income tax (charge) credit | | |
| 431 |
|
| - |
|
| (431 |
) |
| (7,220 |
) |
| - |
|
| (7,220 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit (loss) for the period | | |
| (617 |
) |
| - |
|
| (617 |
) |
| 18,290 |
|
| - |
|
| 18,290 |
|
|
| |
| |
| |
| |
| |
| |
M - 29
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
|
Share
capital
|
Premium
|
Capital
reserves
|
Retained
earnings
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (Unaudited) | | |
| Israeli GAAP | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 44,092 |
|
| 88,374 |
|
|
| |
| |
| |
| |
| |
| Effect of Transition to IFRS | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| Under IFRS rules | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 48,831 |
|
| 92,184 |
|
|
| |
| |
| |
| |
| |
| | | |
| Year ended December 31, 2007 | | |
| Israeli GAAP | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 62,999 |
|
| 107,281 |
|
|
| |
| |
| |
| |
| |
| Effect of Transition to IFRS | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| Under IFRS rules | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 62,999 |
|
| 107,281 |
|
|
| |
| |
| |
| |
| |
| | | |
| Balance - January 1, 2007 | | |
| Israeli GAAP | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 44,709 |
|
| 88,991 |
|
|
| |
| |
| |
| |
| |
| Effect of Transition to IFRS | | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| Under IFRS rules | | |
| 1 |
|
| 43,352 |
|
| 929 |
|
| 44,709 |
|
| 88,991 |
|
|
| |
| |
| |
| |
| |
| |
E. |
Additional
information |
| |
In
accordance with generally accepted accounting principles in Israel, deferred tax assets
or liabilities were classified as current assets or liabilities depending on the
classification of the assets in respect of which they were created. |
| |
Pursuant
to IAS 1, deferred tax assets or liabilities are classified as non-current assets or
liabilities, respectively. |
| |
Consequently,
amounts of NIS 2,376 thousand, NIS 2,767 thousand and NIS 11,257 thousand which were
previously presented under accounts receivable were reclassified to deferred taxes under
non-current taxes as of January 1, 2007, March 31, 2007 and December 31, 2007
respectively. |
| |
2. |
Financial
Revenues and expenses |
| |
In
accordance with generally accepted accounting principles in Israel, financing income and
expenses are presented in the income statement as a net amount. |
| |
Pursuant
to IAS 1, financing income and expenses should be presented separately. |
| |
Consequently,
financing expenses in the amount of NIS 3,429 thousand and NIS 13,822 thousand and
financing income in the amount of NIS 679 thousand and NIS 5,408 thousand were presented
in the income statement for the three moths ended March 31, 2007 and the year ended
December 31, 2007 respectively. |
M - 30
MONDI BUSINESS PAPER HADERA LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
In
accordance with generally accepted accounting principles in Israel, current tax
liabilities were classified as other current liabilities. |
| |
Pursuant
to IAS 1, current tax liabilities are classified as separate balance in the balance
sheet. |
| |
Consequently,
amounts of NIS 76 thousand, NIS 84 thousand and NIS 169 thousand which were previously
presented under other current liabilities were reclassified to current tax liabilities as
of January 1, 2007, March 31, 2007 and December 31, 2007 respectively. |
| |
F. |
Reliefs
with respect to the retroactive implementation of IFRS adopted by the Company |
| |
IFRS
1 includes several reliefs, in respect of which the mandatory retroactive implementation
does not apply. The Company elected to adopt in its opening balance sheet under IFRS as
of January 1, 2007 (hereinafter: “the opening balance sheet”) the reliefs with
regards to: |
| |
1. |
Business
Combinations, in accordance to the relief, the Company chose not to
retroactively implement the provisions of IFRS 3 regarding to business
combination which occurred before January 1, 2007. |
| |
Consequently
goodwill and adjustments due to fair value of subsidiaries that where acquired before
January 1, 2007 are treated in accordance to generally accepted accounting principles in
Israel. |
| |
2. |
IFRS
1 allows to measure fixed assets, as of the transition date, or before it,
based on revaluation that was carried out in accordance to prior accounting
principles, as deemed cost, on the time of the revaluation, if the revaluation
was comparable in general, to the cost or to the cost net of accumulated
depreciation according to the IFRS standards, adjusted to changes such as
changes in the CPI. |
| |
Until
December 31, 2003 the Company adjusted its financial statements to the changes in foreign
rate of the U.S dollar, in accordance with opinion No. 36 of the institute of Certified
Accountancy in Israel. |
| |
For
the purpose of adapting the IFRS standards, the Company chose to implement the above said
relief allowed under IFRS 1, and to measure fixed assets items that were purchased or
established up to December 31, 2003 according to the affective cost for that date, based
on their adjusted value to the foreign exchange rate of the U.S dollar up to that date. |
M - 31
Exhibit 5
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
TABLE OF CONTENTS
 |
Brightman Almagor
Haifa Office
5 Ma'aleh Hashichrur Street
Haifa, 33284
P.O.B. 5648, Haifa 31055
Israel
Tel: +972 (4) 860 7373
Fax: +972 (4) 867 2528
Info-haifa@deloitte.co.il
www.deloitte.com |
The Board of Directors of
Hogla-Kimberly Ltd.
| Re: |
Review
of Unaudited Condensed Interim Consolidated
Financial Statements for the Three
Months Ended March 31, 2008 |
Gentlemen:
At your request, we have reviewed the
condensed interim consolidated financial statements (“interim financial
statements”) of Hogla-Kimberly Ltd. (“the Company”) and its subsidiaries,
as follows:
| – |
Balance
sheet as of March 31, 2008. |
| – |
Statements
of operations for the three months ended March 31, 2008. |
| – |
Statements
of changes in shareholders’ equity for the three months ended March 31, 2008. |
| – |
Statements
of cash flows for the three months ended March 31, 2008. |
Our review was conducted in
accordance with procedures prescribed by the Institute of Certified Public Accountants in
Israel. The procedures included, inter alia, reading the aforementioned interim financial
statements, reading the minutes of the shareholders’ meetings and meetings of the
board of directors and its committees, and making inquiries with the persons responsible
for financial and accounting affairs.
Since the review that was performed
is limited in scope and does not constitute an audit in accordance with generally accepted
auditing standards, we do not express an opinion on the aforementioned interim financial
statements.
In performing our review, nothing
came to our attention, which indicates that material adjustments are required to the
aforementioned interim financial statements for them to be deemed financial statements
prepared in conformity with international accounting standard No. 34 “Interim
Financial Reporting” and in accordance with Section D of the Israeli Securities
Regulations (Periodic and Immediate Reports), 1970.
Brightman Almagor & Co.
Certified Public Accountants
A Member Firm of Deloitte Touche Tohmatsu
Israel
May 1, 2008
H - 1
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(NIS in thousands)
|
March 31,
|
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| 26,190 |
|
| 13,001 |
|
| 23,082 |
|
| Trade receivables | | |
| 307,405 |
|
| 288,007 |
|
| 274,232 |
|
| Inventories | | |
| 184,767 |
|
| 161,735 |
|
| 184,424 |
|
| Current tax assets | | |
| 10,900 |
|
| - |
|
| 9,959 |
|
| Capital note of shareholder | | |
| 31,600 |
|
| - |
|
| - |
|
| Other current assets | | |
| 7,958 |
|
| 10,950 |
|
| 11,542 |
|
|
| |
| |
| |
| | | |
| 568,820 |
|
| 473,693 |
|
| 503,239 |
|
|
| |
| |
| |
| Non-Current Assets | | |
| Capital note of shareholder | | |
| - |
|
| 31,600 |
|
| 31,210 |
|
| VAT Receivable | | |
| 35,299 |
|
| 29,314 |
|
| 43,317 |
|
| Property plant and equipment | | |
| 296,090 |
|
| 292,971 |
|
| 310,368 |
|
| Goodwill | | |
| 19,940 |
|
| 22,315 |
|
| 24,495 |
|
| Deferred tax assets | | |
| 10,428 |
|
| 25,066 |
|
| 11,245 |
|
| Other non-current assets | | |
| 1,990 |
|
| 2,119 |
|
| 2,022 |
|
|
| |
| |
| |
| | | |
| 363,747 |
|
| 403,385 |
|
| 422,657 |
|
|
| |
| |
| |
| | | |
| 932,567 |
|
| 877,078 |
|
| 925,896 |
|
|
| |
| |
| |
| Current Liabilities | | |
| Borrowings | | |
| 96,611 |
|
| 144,887 |
|
| 155,302 |
|
| Trade payables | | |
| 256,707 |
|
| 220,341 |
|
| 265,827 |
|
| Current tax liabilities | | |
| - |
|
| 2,618 |
|
| - |
|
| Other payables and accrued expenses | | |
| 76,321 |
|
| 66,975 |
|
| 58,800 |
|
|
| |
| |
| |
| | | |
| 429,639 |
|
| 434,821 |
|
| 479,929 |
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Borrowings | | |
| 77,098 |
|
| - |
|
| - |
|
| Employee benefit obligations | | |
| 4,956 |
|
| 1,490 |
|
| 5,301 |
|
| Deferred tax liabilities | | |
| 39,576 |
|
| 35,936 |
|
| 39,730 |
|
|
| |
| |
| |
| | | |
| 121,630 |
|
| 37,426 |
|
| 45,031 |
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| Issued capital | | |
| 265,246 |
|
| 265,246 |
|
| 265,246 |
|
| Reserves | | |
| (48,026 |
) |
| (15,791 |
) |
| (8,106 |
) |
| Retained earnings | | |
| 164,078 |
|
| 155,376 |
|
| 143,796 |
|
|
| |
| |
| |
| | | |
| 381,298 |
|
| 404,831 |
|
| 400,936 |
|
|
| |
| |
| |
| | | |
| 932,567 |
|
| 877,078 |
|
| 925,896 |
|
|
| |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Z. Livnat |
O. Argov |
A. Schor |
| Vice-Chairman of the Board of Directors |
Chief Financial Officer |
Chief Executive Officer |
Approval date of the interim
financial statements: May 1, 2008.
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
H - 2
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED INCOME STATEMENTS
(NIS in thousands)
|
Three months ended
March 31,
|
Year ended
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Revenue |
|
|
| 405,330 |
|
| 330,190 |
|
| 1,375,674 |
|
| | | |
| Cost of sales | | |
| 276,817 |
|
| 231,147 |
|
| 968,594 |
|
|
| |
| |
| |
| | | |
| Gross profit | | |
| 128,513 |
|
| 99,043 |
|
| 407,080 |
|
|
| |
| |
| |
| | | |
| Operating costs and expenses | | |
| | | |
| Selling and marketing expenses | | |
| 78,402 |
|
| 71,616 |
|
| 279,901 |
|
| | | |
| General and administrative expenses | | |
| 20,042 |
|
| 18,463 |
|
| 65,729 |
|
|
| |
| |
| |
| | | |
| Operating profit | | |
| 30,069 |
|
| 8,964 |
|
| 61,450 |
|
| | | |
| Finance expenses | | |
| (5,313 |
) |
| (8,023 |
) |
| (29,327 |
) |
| | | |
| Finance income | | |
| 6,237 |
|
| 871 |
|
| 1,790 |
|
|
| |
| |
| |
| | | |
| Profit before tax | | |
| 30,993 |
|
| 1,812 |
|
| 33,913 |
|
| | | |
| Income taxes charge | | |
| (10,711 |
) |
| (22,424 |
) |
| (64,545 |
) |
|
| |
| |
| |
| | | |
| Profit (loss) for the period | | |
| 20,282 |
|
| (20,612 |
) |
| (30,632 |
) |
|
| |
| |
| |
The accompanying notes are an integral
part of the condensed interim consolidated financial statements.
H - 3
HOGLA-KIMBERLY LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(NIS in thousands)
|
Share capital
|
Capital
reserves
|
Foreign
currency
translation reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| March 31, 2008 (unaudited) | | |
| | | |
| Balance - January 1, 2008 | | |
| 29,638 |
|
| 235,608 |
|
| (6,757 |
) |
| (1,349 |
) |
| 143,796 |
|
| 400,936 |
|
| Exchange differences arising on translation of | | |
| foreign operations | | |
| - |
|
| - |
|
| (40,096 |
) |
| - |
|
| - |
|
| (40,096 |
) |
| Movement in capital reserve of hedging | | |
| transactions, net | | |
| - |
|
| - |
|
| - |
|
| 176 |
|
| - |
|
| 176 |
|
| Profit for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 20,282 |
|
| 20,282 |
|
|
| |
| |
| |
| |
| |
| |
| Balance - March 31, 2008 | | |
| 29,638 |
|
| 235,608 |
|
| (46,853 |
) |
| (1,173 |
) |
| 164,078 |
|
| 381,298 |
|
|
| |
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
H - 4
HOGLA-KIMBERLY LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(NIS in thousands)
|
Share capital
|
Capital
reserves
|
Foreign
currency
translation
reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| March 31, 2007 (unaudited) | | |
| | | |
| Balance - January 1, 2007 | | |
| 29,638 |
|
| 230,153 |
|
| (14,393 |
) |
| (76 |
) |
| 181,443 |
|
| 426,765 |
|
| Exchange differences arising on translation of | | |
| foreign operations | | |
| |
|
| - |
|
| (1,196 |
) |
| - |
|
| - |
|
| (1,196 |
) |
| Capitalization of retained earnings | | |
| from Approved Enterprise earnings | | |
| - |
|
| 5,455 |
|
| - |
|
| - |
|
| (5,455 |
) |
| - |
|
| Movement in capital reserve of hedging | | |
| transactions, net | | |
| - |
|
| - |
|
| - |
|
| (126 |
) |
| - |
|
| (126 |
) |
| Loss for the period | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (20,612 |
) |
| (20,612 |
) |
|
| |
| |
| |
| |
| |
| |
| Balance - March 31, 2007 | | |
| 29,638 |
|
| 235,608 |
|
| (15,589 |
) |
| (202 |
) |
| 155,376 |
|
| 404,831 |
|
|
| |
| |
| |
| |
| |
| |
The accompanying notes are an integral
part of the condensed interim consolidated financial statements.
H - 5
HOGLA-KIMBERLY LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(NIS in thousands)
|
Share capital
|
Capital
reserves
|
Foreign
currency
translation
reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
| Balance - January 1, 2007 | | |
| 29,638 |
|
| 230,153 |
|
| (14,393 |
) |
| (76 |
) |
| 181,443 |
|
| 426,765 |
|
| Exchange differences arising on translation of | | |
| foreign operations | | |
| - |
|
| - |
|
| 7,636 |
|
| - |
|
| - |
|
| 7,636 |
|
| Movement in capital reserve of hedging | | |
| transactions, net | | |
| - |
|
| - |
|
| - |
|
| (1,273 |
) |
| - |
|
| (1,273 |
) |
| Capitalization of retained earnings | | |
| from Approved Enterprise earnings | | |
| - |
|
| 5,455 |
|
| - |
|
| - |
|
| (5,455 |
) |
| - |
|
| Movement in capital note revaluation reserve | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (1,560 |
) |
| (1,560 |
) |
| Loss for the year | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (30,632 |
) |
| (30,632 |
) |
|
| |
| |
| |
| |
| |
| |
| Balance - December 31, 2007 | | |
| 29,638 |
|
| 235,608 |
|
| (6,757 |
) |
| (1,349 |
) |
| 143,796 |
|
| 400,936 |
|
|
| |
| |
| |
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
H - 6
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED CASH FLOWS STATEMENTS
(NIS in thousands)
|
Three months ended
March 31,
|
Year ended
December 31,
|
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
|
(unaudited)
|
|
| |
|
|
|
|
|
|
|
| Cash flows - operating activities |
|
|
| |
|
| |
|
| |
|
| Operating profit for the period | | |
| 30,069 |
|
| 8,964 |
|
| 61,450 |
|
| Adjustments to reconcile operating profit to net | | |
| cash provided by (used in) operating activities | | |
| (Appendix A) | | |
| (39,983 |
) |
| 18,801 |
|
| 30,592 |
|
|
| |
| |
| |
| Net cash generated by | | |
| (used in) operating activities | | |
| (9,914 |
) |
| 27,765 |
|
| 92,042 |
|
|
| |
| |
| |
| | | |
| Cash flows - investing activities | | |
| Acquisition of property plant and equipment | | |
| (7,148 |
) |
| (6,768 |
) |
| (43,013 |
) |
| Proceeds from disposal of Property | | |
| plant and equipment | | |
| 128 |
|
| - |
|
| 124 |
|
| Interest received | | |
| 205 |
|
| 147 |
|
| 720 |
|
|
| |
| |
| |
| Net cash used in investing activities | | |
| (6,815 |
) |
| (6,621 |
) |
| (42,169 |
) |
|
| |
| |
| |
| | | |
| Cash flows - financing activities | | |
| Borrowings received | | |
| 77,098 |
|
| - |
|
| - |
|
| Short-term bank credit | | |
| (52,896 |
) |
| (7,820 |
) |
| (7,368 |
) |
| Interest paid | | |
| (1,225 |
) |
| (7,479 |
) |
| (27,291 |
) |
|
| |
| |
| |
| Net cash generated by | | |
| (used in) financing activities | | |
| 22,977 |
|
| (15,299 |
) |
| (34,659 |
) |
|
| |
| |
| |
| | | |
| Net increase in cash and cash equivalents | | |
| 6,248 |
|
| 5,845 |
|
| 15,214 |
|
| Cash and cash equivalents - beginning of period | | |
| 23,082 |
|
| 7,190 |
|
| 7,190 |
|
| Effects of exchange rate changes on the balance of cash held | | |
| in foreign currencies | | |
| (3,140 |
) |
| (34 |
) |
| 678 |
|
|
| |
| |
| |
| Cash and cash equivalents - end of period | | |
| 26,190 |
|
| 13,001 |
|
| 23,082 |
|
|
| |
| |
| |
The accompanying notes are an integral
part of the condensed interim consolidated financial statements.
H - 7
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
APPENDICES TO CONDENSED INTERIM CONSOLIDATED CASH FLOWS STATEMENTS
(NIS in thousands)
| |
|
Three months ended
March 31,
|
Year ended
December 31,
|
| |
|
2 0 0 8
|
2 0 0 7
|
2 0 0 7
|
| |
|
(Unaudited)
|
|
| |
|
|
|
|
| |
|
|
|
|
| A. |
Adjustments to reconcile operating profit |
|
|
| |
|
| |
|
| |
|
| |
to net cash provided by (used in) | | |
| |
operating activities | | |
| |
| | |
| |
Finance income as states in income statements | | |
| 6,237 |
|
| 871 |
|
| 1,790 |
|
| |
Finance expenses as states in income statements | | |
| (5,313 |
) |
| (8,023 |
) |
| (29,327 |
) |
| |
Depreciation and amortization | | |
| 6,956 |
|
| 6,652 |
|
| 27,871 |
|
| |
Capital loss on disposal of property, plant and | | |
| |
equipment | | |
| 280 |
|
| - |
|
| 658 |
|
| |
Effect of exchange rate differences, net | | |
| - |
|
| (36 |
) |
| (1,110 |
) |
| |
Effect of exchange rate differences of capital | | |
| |
note to shareholder | | |
| (390 |
) |
| (390 |
) |
| (1,560 |
) |
| |
Income tax paid | | |
| (11,712 |
) |
| (6,716 |
) |
| (42,970 |
) |
| |
| | |
| |
Changes in assets and liabilities: | | |
| |
Decrease (Increase) in trade receivables | | |
| (47,822 |
) |
| (26,306 |
) |
| 11,505 |
|
| |
Decrease (Increase) in other current assets | | |
| 2,502 |
|
| (414 |
) |
| (516 |
) |
| |
Decrease (Increase) in inventories | | |
| (12,298 |
) |
| 10,537 |
|
| (7,004 |
) |
| |
Increase (Decrease) in trade payables | | |
| (4,641 |
) |
| 13,326 |
|
| 50,770 |
|
| |
Net change in balances with related parties | | |
| 2,127 |
|
| 4,325 |
|
| (5,878 |
) |
| |
Increase in other payables and accrued | | |
| |
expenses | | |
| 21,559 |
|
| 21,233 |
|
| 10,467 |
|
| |
Decrease in other long term asset | | |
| (42 |
) |
| (3,281 |
) |
| (14,177 |
) |
| |
Long term liability for employee benefit obligations | | |
| 1,554 |
|
| (309 |
) |
| 3,502 |
|
| |
|
| |
| |
| |
| |
| | |
| (41,003 |
) |
| 11,469 |
|
| 4,021 |
|
| |
|
| |
| |
| |
| |
| | |
| |
Interest received | | |
| (205 |
) |
| (147 |
) |
| (720 |
) |
| |
Interest paid | | |
| 1,225 |
|
| 7,479 |
|
| 27,291 |
|
| |
|
| |
| |
| |
| |
| | |
| (39,983 |
) |
| 18,801 |
|
| 30,592 |
|
| |
|
| |
| |
| |
The accompanying notes are an
integral part of the condensed interim consolidated financial statements.
H - 8
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 1 |
– |
DESCRIPTION
OF BUSINESS AND GENERAL |
| |
A. |
Description
Of Business |
| |
Hogla
Kimberly Ltd. (“the Company”) and its Subsidiaries are engaged principally in
the production and marketing of paper and hygienic products. The Company’s results
of operations are affected by transactions with shareholders and affiliated companies. |
| |
The
Company is owned by Kimberly Clark Corp. ("KC" or the "Parent Company")
(50.1%) and American-Israeli Paper Mills Ltd. ("AIPM") (49.9%). |
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
The Company |
– |
Hogla-Kimberly Ltd. |
| |
|
| |
The Group |
– |
the Company and its Subsidiaries. |
| |
|
| |
Subsidiaries |
– |
companies in which the Company control, (as defined by IAS 27) directly or indirectly, and whose financial statements are fully consolidated with those of the Company. |
| |
|
| |
Related Parties |
– |
as defined by IAS 24. |
| |
|
| |
Interested Parties |
– |
as defined in the Israeli Securities Regulations (Presentation of Financial Statements), 1993. |
| |
|
| |
Controlling Shareholder |
– |
as defined in the Israeli Securities law and Regulations 1968. |
| |
|
| |
NIS |
– |
New Israeli Shekel. |
| |
|
| |
CPI |
– |
the Israeli consumer price index. |
| |
|
| |
Dollar |
– |
the U.S. dollar. |
| |
|
| |
YTL |
– |
the Turkish New Lira. |
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
| |
A. |
Applying
International Accounting Standards (IFRS) |
| |
The
condensed interim financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance with
International Accounting Standard (IAS) 34 – “Interim Financial Reporting”. |
| |
The
principal accounting policies described in the following notes were applied in accordance
to the IFRS, in a manner consistent with previous reporting periods presented in these
condensed interim financial statements and in accordance to the opening balance sheet. |
H - 9
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
A. |
Applying
International Accounting Standards (IFRS) (Cont.) |
| |
(1) |
Basis
of preparation (Cont.) |
| |
The
unaudited condensed interim consolidated financial statements as of March 31, 2008 and
for the three months then ended (“interim financial statements”) of the Company
and subsidiaries should be read in conjunction with the audited consolidated financial
statements of the Company and subsidiaries as of December 31, 2007 and for the year then
ended, including the notes thereto. |
| |
(2) |
First
term IFRS standards adoption |
| |
According
to standard No. 29 “Adoption of International Financial Reporting Standards”– IFRS
(“standard No. 29”), the Company applies International Financial Reporting
Standards and interpretations of the committee of the International Accounting Standard
Board (IASB) Starting January 1, 2008. |
| |
In
compliance with the mentioned above, the condensed interim financial statements, as of
March 31, 2008 and for the three months then ended, including all previous reporting
periods have been prepared under accounting policies consistent with International
Financial Reporting Standards and interpretations published by the International
Accounting Standard Board (IASB) and in accordance with International Accounting Standard
(IAS) 34 Interim Financial Reporting. |
| |
In
these condensed interim financial statements the Company applied IFRS 1 – “First
time Adoption of International Financial Reporting Standards” (“IFRS No. 1”),
which determines instructions for first time implementation of IFRS. |
| |
According
to IFRS No. 1 the effective date for implementing IFRS standards is commencing January 1,
2007. |
| |
The
Company has applied in a retroactive manner the IFRS standards for all reporting periods
presented in the condensed interim financial statements. The Company implemented the IFRS
standards which have been published as of the preparation date of the condensed interim
Financial Statements and expected to be affective as of December 31, 2008 while applying
the said transition instructions the Company chose to apply one relief allowed under IFRS
No. 1, see Note 7F. |
| |
Until
the adoption of IFRS the Company conducted the Financial Reporting in accordance with the
Israeli GAAP. The annual financial statements as of December 31, 2007 and for the periods
then ended were prepared under the Israeli GAAP standards. The comparative financial
statements were represented in the condensed interim financial statements in accordance
to the IFRS standards. See note 7 for the relevant material adjustments between the
Israeli GAAP and the IFRS. |
| |
B. |
The
condensed Financial Statements were prepared in accordance with section D of
the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. |
H - 10
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Until
December 31, 2003, Israel was considered a country in which hyper-inflation conditions
exist. Therefore, non-monetary balances in the balance sheet were presented on the
historical nominal amount and were adjusted to changes in the exchange rate of the U.S.
dollar. As of December 31, 2003 when the economy ceases to be hyper-inflationary and the
Company no longer adjusted its financial statements to the U.S. dollar, the adjusted
amounts as of this date were used as the historical costs. The financial statements were
edited on the basis of the historical cost, except for: |
| |
— |
Assets
and liabilities measured by fair derivative financial instruments. |
| |
— |
Non-current
assets, except for investment property measured by fair value classified as held for sale
are measured at the lower of their previous carrying amount and fair value less costs of
sale. |
| |
— |
Inventories
are stated at the lower of cost and net realisable value. |
| |
— |
Property,
plant and equipment and intangibles assets are presented at the lower of the cost less
accumulated amortizations and the recoverable amount. |
| |
— |
Liabilities
to employees as described in note 2N. |
| |
The
individual financial statements of each group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For
the purpose of the consolidated financial statements, the results and financial position
of each entity are expressed in the New Israeli Shekel (“NIS”), which is the
functional currency of the Company and the presentation currency for the consolidated
financial statements. |
| |
In
preparing the financial statements of the individual entities, transactions in currencies
other than the entity’s functional currency (foreign currencies) are recorded at the
rates of exchange prevailing at the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. |
H - 11
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
D. |
Foreign
currencies (Cont.) |
| |
Exchange
differences are recognised in profit or loss in the period in which they except for: |
| |
— |
exchange
differences on transactions entered into in order to hedge certain foreign currency
risks. |
| |
— |
exchange
differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognised in the foreign currency translation
reserve and recognised in profit or loss on disposal of the net investment. |
| |
For
the purpose of presenting consolidated financial statements, the assets and liabilities
of the Group’s foreign operations are expressed in NIS using exchange rates
prevailing at the balance sheet date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates fluctuated significantly
during that period, in which case the exchange rates at the dates of the transactions are
used. |
| |
Goodwill
and fair value adjustments arising on the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the closing rate. |
| |
E. |
Basis
of consolidation |
| |
The
consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. |
| |
The
results of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate. |
| |
Where
necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group. |
| |
All
intra-group transactions, balances, income and expenses are eliminated in full on
consolidation. |
| |
For
the effect of the issuance of IAS 27 (revised) “Consolidated and Separate Financial
Statements” see note 2S below. |
| |
Goodwill
arising on the acquisition of a subsidiary represents the excess of the cost of
acquisition over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities of the subsidiary or jointly controlled
entity recognised at the date of acquisition. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated impairment losses. |
H - 12
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
For
the purpose of impairment testing, goodwill is allocated to each of the Group’s
cash-generating units expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than the carrying amount of
the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the
basis of the carrying amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period. |
| |
On
disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal. |
| |
G. |
Property,
plant and equipment |
| |
Property,
plant and equipments are tangible items, which are held for use in the manufacture or
supply of goods or services, or leased to others, which are predicted to be used for more
than one period. The Company presents its property, plant and equipments items according
to the cost model. |
| |
Under
the cost method – a property, plant and equipment are presented at the balance sheet
at cost (net of any investment grants), less any accumulated depreciation and any
accumulated impairment losses. The cost includes the cost of the asset’s acquisition
as well as costs that can be directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the manner intended by
management. |
| |
Depreciation
is calculated using the straight-line method at rates considered adequate to depreciate
the assets over their estimated useful lives. Amortization of leasehold improvements is
computed over the shorter of the term of the lease, including any option period, where
the Company intends to exercise such option, or their useful life. |
| |
The
annual depreciation and amortization rates are: |
|
%
|
| |
|
|
|
|
|
|
|
| Buildings |
2-4 |
| Leasehold improvements |
10-25 |
| Machinery and equipment |
5-10 |
| Motor vehicles |
15-20 |
| Office furniture and equipment |
6-33 |
| |
Scrap
value, depreciation method and the assets useful lives are being reviewed by management
in the end of every financial year. Changes are handled as a change of estimation and are
applied from here on. |
| |
The
gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in income statement. |
H - 13
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
H. |
Impairment
of tangible and intangible assets excluding goodwill |
| |
At
each balance sheet date, the Group reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Where a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable
and consistent allocation basis can be identified. |
| |
Intangible
assets with indefinite useful lives and intangible assets not yet available for use are
tested for impairment annually, and whenever there is an indication that the asset may be
impaired. |
| |
Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease. |
| |
Inventories
are assets held for sale in the ordinary course of business, in the process of production
for such sale or in the form of materials or supplies to be consumed in the production
process or in the rendering of services. |
| |
Inventories
are stated at the lower of cost and net realisable value. Cost of inventories includes
all the cost of purchase, direct labor, fixed and variable production over heads and
other cost that are incurred, in bringing the inventories to their present location and
condition. |
| |
Net
realisable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. |
H - 14
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Cost
determined as follows: |
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Manufactured finished products |
Based on standard cost method |
| |
|
| |
Purchased finished goods raw, auxiliary materials and other |
Based on moving-average basis. |
| |
|
|
| |
Inventories
that are purchase on differed settlement terms, which contains a financing element, are
stated in purchase price for normal credit terms. The difference between the purchase
price for normal credit terms and the amount paid is recognised as interest expense over
the period of the financing. |
| |
Investments
are recognised and derecognised on trade date where the purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through
profit or loss, which are initially measured at fair value. |
| |
Financial
assets are classified into the following specified categories: |
| |
— |
Financial
assets `at fair value through profit or loss' (FVTPL) |
| |
(2) |
Financial
assets at FVTPL |
| |
Financial
assets are classified as at FVTPL where the financial asset is either held for trading or
it is designated as at FVTPL. |
| |
A
financial asset is classified as held for trading if: |
| |
— |
it
has been acquired principally for the purpose of selling in the
near future; or |
| |
— |
it
is a part of an identified portfolio of financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or |
| |
— |
it
is a derivative that is not designated and effective as a hedging instrument. |
| |
A
financial asset other than a financial asset held for trading may be designated as at
FVTPL upon initial recognition if: |
| |
— |
such
designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or |
| |
— |
the
financial asset forms part of a group of financial assets or financial liabilities or
both, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Group’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or |
H - 15
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
J. |
Financial
assets (Cont.) |
| |
(2) |
Financial
assets at FVTPL |
| |
— |
it
forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial
Instruments: Recognition and Measurement permits the entire combined contract
(asset or liability) to be designated as at FVTPL. |
| |
Financial
assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in
profit or loss. The net gain or loss recognised in profit or loss incorporates any
dividend or interest earned on the financial asset. |
| |
(3) |
Loans
and receivables |
| |
Trade
receivables, loans, and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as loans and receivables. Loans and
receivables are measured at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be immaterial. |
| |
(4) |
Impairment
of financial assets |
| |
Financial
assets, other than those at FVTPL, are assessed for indicators of impairment at each
balance sheet date. |
| |
Financial
assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted. |
| |
For
unlisted shares classified as AFS, a significant or prolonged decline in the fair value
of the security below its cost is considered to be objective evidence of impairment. |
| |
For
all other financial assets, including redeemable notes classified as AFS and finance
lease receivables, objective evidence of impairment could include: |
| |
— |
significant
financial difficulty of the issuer or counterparty; or |
| |
— |
default
or delinquency in interest or principal payments; or |
| |
— |
it
becoming probable that the borrower will enter bankruptcy or financial re-organisation. |
| |
For
financial assets carried at amortised cost, the amount of the impairment is the
difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original effective interest
rate. |
H - 16
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
J. |
Financial
assets (Cont.) |
| |
(4) |
Impairment
of financial assets (Cont.) |
| |
The
carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. |
| |
When
a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized
in profit or loss. |
| |
With
the exception of AFS equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss
is reversed through profit or loss to the extent that the carrying amount of the
investment at the date the impairment is reversed does not exceed what the amortized cost
would have been had the impairment not been recognized. |
| |
In
respect of AFS equity securities, impairment losses previously recognised through profit
or loss are not reversed through profit or loss. Any increase in fair value subsequent to
an impairment loss is recognised directly in equity. |
| |
K. |
Other
financial liabilities |
| |
Other
financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs. Other financial liabilities are subsequently measured at amortized
cost using the effective interest method, with interest expense recognized on an
effective yield basis. |
| |
The
effective interest method is a method of calculating the amortized cost of a financial
liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through
the expected life of the financial liability, or, where appropriate, a shorter period. |
| |
Provisions
are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognized as a provision is the best estimate of the consideration required to
settle the present obligation at the balance sheet date, taking into account the risks
and uncertainties surrounding the obligation. |
| |
Where
a provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount is the present value of those cash flows. |
| |
When
some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably. |
H - 17
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
M. |
Derivative
financial instruments |
| |
The
Group enters into a variety of derivative financial instruments to manage its exposure to
foreign exchange rate risk, including foreign exchange forward contracts. |
| |
Derivatives
are initially recognised at fair value at the date a derivative contract is entered into
and are subsequently remeasured to their fair value at each balance sheet date. The
resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. The Group
designates certain derivatives as hedges of highly probable forecast transactions or
hedges of foreign currency risk of firm commitments (cash flow hedges). |
| |
A
derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities. |
| |
The
Group designates certain hedging instruments, which include derivatives, and
non-derivatives in respect of foreign currency risk, as cash flow hedges. |
| |
At
the inception of the hedge relationship, the entity documents the relationship between
the hedging instrument and the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective in offsetting changes in fair
values or cash flows of the hedged item. |
| |
The
effective portion of changes in the fair value of derivatives that are designated and
qualify as cash flow hedges are deferred in equity. The gain or loss relating to the
ineffective portion is recognised immediately in profit or loss, and is included in the
“finance income” or “finance expenses” lines of the income statement.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged
item is recognised in profit or loss, in the same line of the income statement as the
recognised hedged item. However, when the forecast transaction that is hedged results in
the recognition of a non-financial asset or a non-financial liability, the gains and
losses previously deferred in equity are transferred from equity and included in the
initial measurement of the cost of the asset or liability. |
| |
Hedge
accounting is discontinued when the Group revokes the hedging relationship, the hedging
instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in equity at that time remains in equity
and is recognised when the forecast transaction is ultimately recognised in profit or
loss. When a forecast transaction is no longer expected to occur, the cumulative gain or
loss that was deferred in equity is recognised immediately in profit or loss. |
H - 18
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Revenue
is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances. |
| |
Revenue
from the sale of goods is recognised when all the following conditions are satisfied: |
| |
— |
The
Group has transferred to the buyer the significant risks and rewards of ownership of
the goods; |
| |
— |
The
Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold |
| |
— |
The
amount of revenue can be measured reliably; |
| |
— |
It
is probable that the economic benefits associated with the transaction will flow to
the entity; and |
| |
— |
The
costs incurred or to be incurred in respect of the transaction can be measured reliably. |
| |
Interest
revenue is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s
net carrying amount. |
| |
Income
tax expense represents the sum of the tax currently payable and deferred tax. |
| |
The
tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance sheet
date. |
H - 19
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Deferred
tax is recognised on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and
deferred tax assets are generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. |
| |
The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered. |
| |
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the balance sheet date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. |
| |
Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis. |
| |
(3) |
Current
and deferred tax for the period |
| |
Current
and deferred tax are recognised as an expense or income in profit or loss, except when
they relate to items credited or debited directly to equity, in which case the tax is
also recognised directly in equity, or where they arise from the initial accounting for a
business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or in determining the excess of the acquirer’s
interest in the net fair value of the acquiree’s identifiable assets, liabilities
and contingent liabilities over the cost of the business combination. |
| |
Operating
lease payments are recognised as an expense on a straight-line basis over the lease term.
the Company’s lands in Afula which were leased from the Israel Land Administration,
is presented in the Company’s balance sheet as other non-current assets, and
amortized over the remaining period of the lease. |
H - 20
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
Q. |
Retirement
benefit costs |
| |
Payments
to defined contribution retirement benefit schemes are charged as an expense as they fall
due and include early retirement pay, severance pay and pensioner’s gifts. |
| |
For
defined benefit schemes, the cost of providing benefits is determined using the Projected
Unit Credit Method, with actuarial valuations being carried out at each balance sheet
date. Actuarial gains and losses are recognised in full in the period in which they occur
in the income statement.
Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortised on a straight-line basis over
the average period until the benefits become vested. |
| |
The
retirement benefit obligation recognised in the balance sheet represents the present
value of the defined benefit obligation as adjusted for unrecognised past service cost,
and as reduced by the fair value of scheme assets. Any asset resulting from this
calculation is limited to past service cost, plus the present value of available refunds
and reductions in future contributions to the scheme. |
| |
With
regards to the publication of IFRIC 14 see note 2S below. |
| |
R. |
Exchange
Rates and Linkage Basis |
| |
Following
are the changes in the representative exchange rates of the U.S. dollar vis-a-vis the NIS
and the Turkish Lira and in the Israeli Consumer Price Index (“CPI”): |
| |
As of:
|
Turkish Lira
exchange rate
vis-a-vis the
U.S. dollar
(TL'000 per $1)
|
Representative
exchange rate of
the dollar
(NIS per $1)
|
CPI
"in respect of"
(in points)
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
March 31, 2008 |
|
|
| 1,334 |
|
| 3.553 |
|
| 106.50 |
|
| |
March 31, 2007 | | |
| 1,394 |
|
| 4.155 |
|
| 102.66 |
|
| |
December 31, 2007 | | |
| 1,176 |
|
| 3.846 |
|
| 106.40 |
|
| |
Increase (decrease) during the:
|
%
|
%
|
%
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Three months ended March 31, 2008 |
|
|
| 13.4 |
|
| (7.62 |
) |
| 0.10 |
|
| |
Three months ended March 31, 2007 | | |
| (1.3 |
) |
| (1.66 |
) |
| (0.24 |
) |
| |
Year ended December 31, 2007 | | |
| (16.7 |
) |
| (8.97 |
) |
| 3.39 |
|
H - 21
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
S. |
Adoption
of new and revised Standards and interpretations |
| |
(1) |
Standards
and Interpretations which are effective and have been applied in these financial
statements as of March 31, 2008 and for the three months then ended. |
| |
Interpretations
issued by the International Financial Reporting Interpretations Committee are effective
for the current period. These are: |
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
— |
IFRIC 11 |
IFRS 2: Group and Treasury Share Transactions (effective 1 March 2007); |
| |
|
| |
— |
IFRIC 12 |
Service Concession Arrangements (effective 1 January 2008); |
| |
|
| |
— |
IFRIC 14 |
IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements
and their Interaction (effective 1 January 2008). |
| |
The
adoption of IFRIC 11 will effect the the Group’s accounting policies with regards to
the stock options granted by AIPM to senior management of the company (see Note 3). |
| |
Except
for the above, the adoption of the Interpretations has not led to any changes in the Group’s
accounting policies. |
| |
(2) |
Standards
and Interpretations which have not been applied in these financial statements were
in issue but not yet effective |
| |
At
the date of authorization of these interim financial statements, other than the Standards
and Interpretations adopted by the Group in advance of their effective dates the
following Interpretations were in issue but not yet effective: |
| |
— |
IAS
23 (Revised) – Borrowing Costs (effective for accounting periods beginning on or
after 1 January 2009); |
| |
— |
IAS
27 (Revised) – Consolidated and Separate Financial Statements (effective for
accounting periods beginning on or after 1 January 2010); |
| |
— |
IAS
32 and IAS 1 – Amendments for Puttable Instruments and Obligations Arising on
Liquidation (effective for accounting periods beginning on or after 1 January 2009); |
| |
— |
IFRS
2 – Vesting Conditions and Cancellations (effective for accounting periods beginning
on or after 1 January 2009); |
| |
— |
IFRS
3 - BUSINESS COMBINATIONS (effective for accounting periods beginning on or after 1
July 2009); |
| |
— |
IFRS
8 - Operating Segments (effective for accounting periods beginning on or after 1
January 2009); and |
| |
— |
IFRIC
13 – Customer Loyalty Programmes (effective for accounting periods beginning on or
after 1 July 2008). |
H - 22
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 2 |
– |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
S. |
Adoption
of new and revised Standards and interpretations (Cont.) |
| |
(2) |
Standards
and Interpretations which have not been applied in these financial
statements were in issue but not yet effective (Cont.) |
| |
The
Company anticipates that all of the above Interpretations will be adopted in the Group’s
financial statements as of the effective date of the interpretation and that the adoption
of those Interpretations will have no material impact on the financial statements of the
Group in the period of initial application. |
| NOTE 3 |
– |
CRITICAL
ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
| |
In
the application of the Group’s accounting policies, which are described in Note 2,
the management is required to make judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these
estimates. |
| |
The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods. |
| |
(2) |
Critical
judgments in applying accounting policies |
| |
The
following are the critical judgments, apart from those involving estimations (see below),
that the management have made in the process of applying the entity’s accounting
policies and that have the most significant effect on the amounts recognised in financial
statements. |
| |
In
making their judgment, the management considered the detailed criteria for the
recognition of revenue from the sale of goods set out in IAS 18 Revenue and, in
particular, whether the Group had transferred to the buyer the significant risks and
rewards of ownership of the goods. Following the detailed quantification of the Group’s
liability in respect of rectification work, and the agreed limitation on the customer’s
ability to require further work or to require replacement of the goods, the management is
satisfied that the significant risks and rewards have been transferred and that
recognition of the revenue in the current year is appropriate, in conjunction with the
recognition of an appropriate provision for the rectification costs. |
| |
Determining
whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation
requires the management to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate present value. |
| |
The
carrying amount of goodwill at the balance sheet date was NIS 20 million. |
| |
Useful
lives of property, plant and equipment |
| |
As
described at 2G above, the Group reviews the estimated useful lives of property, plant
and equipment at the end of each annual reporting period. |
H - 23
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 3 |
– |
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont.) |
| |
(3) |
Key
sources of estimation uncertainty |
| |
The
following are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the balance sheet date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next
financial year. |
| |
Employee
retirement benefits |
| |
The
present value of the employee retirement benefits is based on an actuarial valuation
using many assumptions inter alia the capitalization rate. Changes in the assumptions may
influence the book value of the liabilities for retirement benefits. The Company
determines the capitalization rate once a year based on the basis of the capitalization
rate of government bonds. Other key assumptions are based on the current prevailing terms
in the market and the past experience of the Company (see also note 2Q above). |
| NOTE 4 |
– |
SEGNIFICANT TRANSACTIONS AND EVENTS |
| |
On
January 2008, the Company made an agreement with an Israeli bank for an prime linked
interest loan in the amount of NIS 100 million which will be repaid during 4 year period.
As part of the agreement the company agreed to the following covenants: |
| |
1. |
It’s
shareholder’s equity will not be less than NIS 250 million and not
less than 25% of the total consolidated assets. |
| |
2. |
Both
the company’s shareholder’s Kimberly Clark and AIPM separately or
together, will not hold less than 51% of the company’s share capital. |
| NOTE 5 |
– |
RELATED PARTIES AND INTERESTED PARTIES |
| |
A. |
Balances
with Related Parties |
| |
|
March 31,
|
December 31,
|
| |
|
2008
|
2007
|
2007
|
| |
|
(Unaudited)
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Trade receivables |
|
|
| 24,295 |
|
| 3,327 |
|
| 22,678 |
|
| |
|
| |
| |
| |
| |
| | |
| |
Capital note - shareholder | | |
| 31,600 |
|
| 31,600 |
|
| 32,770 |
|
| |
|
| |
| |
| |
| |
| | |
| |
Trade payables | | |
| 58,851 |
|
| 43,209 |
|
| 55,099 |
|
| |
|
| |
| |
| |
H - 24
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 5 |
– |
RELATED PARTIES AND INTERESTED PARTIES (Cont.) |
| |
B. |
Transactions
with Related Parties |
| |
|
Three months ended March 31,
|
Year ended
December 31,
|
| |
|
2008
|
2007
|
2007
|
| |
|
(Unaudited)
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Sales to related parties |
|
|
| 45,076 |
|
| 9,254 |
|
| 82,217 |
|
| |
|
| |
| |
| |
| |
| | |
| |
Cost of sales | | |
| 46,311 |
|
| 41,810 |
|
| 188,252 |
|
| |
|
| |
| |
| |
| |
| | |
| |
Royalties to the shareholders | | |
| 7,523 |
|
| 7,358 |
|
| 28,069 |
|
| |
|
| |
| |
| |
| |
General and administrative | | |
| |
expenses | | |
| 2,980 |
|
| 2,764 |
|
| 10,944 |
|
| |
|
| |
| |
| |
| NOTE 6 |
– |
INCOME TAX CHARGE |
| |
(1) |
The
effective tax rate for the three months period ended March 31, 2008 is 34.5%
and is mainly due to unrecorded deferred taxes in connection with tax loss
carry foreword in KCTR, income in reduced tax rate and non deductible
expenses. |
| |
(2) |
Under
the inflationary adjustments law, results for tax purposes are measured in
real terms, having regard to the changes in the Israeli CPI. The Company
and its subsidiaries in Israel are taxed under this law. |
| |
On
February 26, 2008, the Knesset ratified the third reading of the Income Tax Law (“Inflation
Adjustments”) (Amendment 20) (Limitation of Term of Validity) –2008
(hereinafter: “The Amendment”), pursuant to which the application of the
inflationary adjustment law will terminate in tax year 2007 and as of tax year 2008, the
law will no longer apply, other than transition regulations whose intention it is to
prevent distortions in tax calculations. |
| |
According
to the amendment, in tax year 2008 and thereafter, the adjustment of revenues for tax
purposes will no longer be considered a real-term basis for measurement. Moreover, the
linkage to the CPI of the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be adjusted until the
CPI at the end of 2007 and their linkage to the CPI will end as of that date. |
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS |
| |
Following
the publication of Accounting Standard No. 29, “the Adoption of International
Financial Reporting Standards (IFRS)” in July 2006, the Company adopted IFRS
starting January 1, 2008. |
H - 25
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
Pursuant
to the provisions of IFRS1, which deals with the first-time adoption of IFRS, and
considering the date in which the Company elected to adopt these standards for the first
time, the financial statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31, 2008, and for the year
ended on that date. The date of transition of the Company to reporting under IFRS, as it
is defined in IFRS 1, is January 1, 2007 (hereinafter: “the transition date”),
with an opening balance sheet as of January 1, 2007 (hereinafter: “Opening Balance”).
The Company’s interim financial statements for 2008 will also be drawn up in
accordance with IFRS, and shall include comparative figures for the year. |
| |
Under
the opening balance sheet, the Company performed the following reconciliations: |
| |
— |
Recognition
of all assets and liabilities whose recognition is required by IFRS. |
| |
— |
De-recognition
of assets and liabilities if IFRS do not permit such recognition. |
| |
— |
Classification
of assets, liabilities and components of equity according to IFRS. |
| |
— |
Application
of IFRS in the measurement of all recognized assets and liabilities. |
| |
IFRS
1 states that all IFRS shall be adopted retroactively for the opening balance sheet. At
the same time, IFRS 1 includes 14 reliefs, in respect of which the mandatory retroactive
implementation does not apply. As to the reliefs implemented by the Company, see section
F below. |
| |
Changes
in the accounting policy which the Company implemented retroactively in the opening
balance sheet under IFRS, compared to the accounting policy in accordance with Generally
Accepted Accounting Principles in Israel, were recognized directly under Retained
Earnings or another item of Shareholders’ Equity, as the case may be. |
| |
This
note is formulated on the basis of International Financial Reporting Standards and the
notes thereto as they stand today, that have been published and shall enter into force or
that may be adopted earlier as at the Group’s first annual reporting date according
to IFRS, December 31, 2008. Pursuant to the above, the Company’s management has made
assumptions regarding the anticipated financial reporting regulations that are expected
to be implemented when the first annual financial statements are prepared according to
IFRS, for the year ended December 31, 2008. |
| |
The
IFRS standards that will be in force or that may be adopted in the financial
statements for the year ended December 31, 2008 are subject to changes and the
publication of additional clarifications. Consequently, the financial reporting
standards that shall be applied to the represented periods will be determined finally
only upon preparation of the first financial statements according to IFRS, as at December
31, 2008. |
| |
Listed
below are the Company’s consolidated balance sheets as of January 1, 2007, March 31,
2007 and December 31, 2007, the consolidated statement of income and the shareholders’ equity
for the year ended on December 31, 2007 and the three months ended March 31, 2007
prepared in accordance with International Accounting Standards. In addition, the table
presents the material reconciliations required for the transition from reporting under
Israeli GAAP to reporting under IFRS. |
H - 26
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS: |
|
|
March 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| |
|
| 13,001 |
|
| - |
|
| 13,001 |
|
| Trade receivables | | |
| |
|
| 288,007 |
|
| - |
|
| 288,007 |
|
| Inventories | | |
| |
|
| 161,735 |
|
| - |
|
| 161,735 |
|
| Current tax assets | | |
| E2 |
|
| - |
|
| 6,704 |
|
| 6,704 |
|
| Other current assets | | |
| E1, E2 |
|
| 23,936 |
|
| (12,986 |
) |
| 10,950 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 486,679 |
|
| (6,282 |
) |
| 480,397 |
|
|
|
| |
| |
| |
| Non-Current Assets | | |
| Capital note of shareholder | | |
| E7 |
|
| 32,770 |
|
| (1,170 |
) |
| 31,600 |
|
| VAT Receivable | | |
| |
|
| 29,314 |
|
| - |
|
| 29,314 |
|
| Property, plant and equipment | | |
| E3 |
|
| 297,456 |
|
| (4,485 |
) |
| 292,971 |
|
| Goodwill | | |
| |
|
| 22,315 |
|
| - |
|
| 22,315 |
|
| Other non-current assets | | |
| E3 |
|
| - |
|
| 2,119 |
|
| 2,119 |
|
| Deferred tax assets | | |
| E1, E4 |
|
| 18,660 |
|
| 6,406 |
|
| 25,066 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 400,515 |
|
| 2,870 |
|
| 403,385 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 887,194 |
|
| (3,412 |
) |
| 883,782 |
|
|
|
| |
| |
| |
| Current Liabilities | | |
| Borrowings | | |
| |
|
| 144,887 |
|
| - |
|
| 144,887 |
|
| Trade payables | | |
| |
|
| 220,341 |
|
| - |
|
| 220,341 |
|
| Current tax liabilities | | |
| E2 |
|
| - |
|
| 9,322 |
|
| 9,322 |
|
| Other payables and accrued expenses | | |
| E2, E4 |
|
| 77,159 |
|
| (10,184 |
) |
| 66,975 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 442,387 |
|
| (862 |
) |
| 441,525 |
|
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Employee benefit obligations | | |
| E4 |
|
| - |
|
| 1,490 |
|
| 1,490 |
|
| Deferred tax liabilities | | |
| E3 |
|
| 36,515 |
|
| (579 |
) |
| 35,936 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 36,515 |
|
| 911 |
|
| 37,426 |
|
|
|
| |
| |
| |
| Capital and reserves | | |
| Issued capital | | |
| |
|
| 265,246 |
|
| - |
|
| 265,246 |
|
| Reserves | | |
| |
|
| (15,791 |
) |
| - |
|
| (15,791 |
) |
| Retained earnings | | |
| |
|
| 158,837 |
|
| (3,461 |
) |
| 155,376 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 408,292 |
|
| (3,461 |
) |
| 404,831 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 887,194 |
|
| (3,412 |
) |
| 883,782 |
|
|
|
| |
| |
| |
H - 27
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS (Cont.) |
|
|
December 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| |
|
| 23,082 |
|
| - |
|
| 23,082 |
|
| Trade receivables | | |
| |
|
| 274,232 |
|
| - |
|
| 274,232 |
|
| Inventories | | |
| |
|
| 184,424 |
|
| - |
|
| 184,424 |
|
| Current tax assets | | |
| E2 |
|
| - |
|
| 21,786 |
|
| 21,786 |
|
| Other current assets | | |
| E1, E2 |
|
| 39,098 |
|
| (27,556 |
) |
| 11,542 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 520,836 |
|
| (5,770 |
) |
| 515,066 |
|
|
|
| |
| |
| |
| Non-Current Assets | | |
| Capital note of shareholder | | |
| E7 |
|
| 32,770 |
|
| (1,560 |
) |
| 31,210 |
|
| VAT Receivable | | |
| |
|
| 43,317 |
|
| - |
|
| 43,317 |
|
| Property plant and equipment | | |
| E3 |
|
| 314,853 |
|
| (4,485 |
) |
| 310,368 |
|
| Goodwill | | |
| |
|
| 24,495 |
|
| - |
|
| 24,495 |
|
| Other non-current assets | | |
| E3 |
|
| - |
|
| 2,022 |
|
| 2,022 |
|
| Deferred tax assets | | |
| E1, E4 |
|
| 5,261 |
|
| 5,984 |
|
| 11,245 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 420,696 |
|
| 1,961 |
|
| 422,657 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 941,532 |
|
| (3,809 |
) |
| 937,723 |
|
|
|
| |
| |
| |
| Current Liabilities | | |
| Borrowings | | |
| |
|
| 155,302 |
|
| - |
|
| 155,302 |
|
| Trade payables | | |
| |
|
| 265,827 |
|
| - |
|
| 265,827 |
|
| Current tax liabilities | | |
| E2 |
|
| - |
|
| 11,827 |
|
| 11,827 |
|
| Other payables and accrued expenses | | |
| E2, E4 |
|
| 71,525 |
|
| (12,725 |
) |
| 58,800 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 492,654 |
|
| (898 |
) |
| 491,756 |
|
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Employee benefit obligations | | |
| E4 |
|
| 3,402 |
|
| 1,899 |
|
| 5,301 |
|
| Deferred tax liabilities | | |
| E3 |
|
| 40,333 |
|
| (603 |
) |
| 39,730 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 43,735 |
|
| 1,296 |
|
| 45,031 |
|
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| Issued capital | | |
| |
|
| 265,246 |
|
| - |
|
| 265,246 |
|
| Reserves | | |
| |
|
| (8,106 |
) |
| - |
|
| (8,106 |
) |
| Retained earnings | | |
| |
|
| 148,003 |
|
| (4,207 |
) |
| 143,796 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 405,143 |
|
| (4,207 |
) |
| 400,936 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 941,532 |
|
| (3,809 |
) |
| 937,723 |
|
|
|
| |
| |
| |
H - 28
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
B. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS (Cont.) |
|
|
January 1, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition to
IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| Cash and cash equivalents | | |
| |
|
| 7,190 |
|
| - |
|
| 7,190 |
|
| Trade receivables | | |
| |
|
| 263,126 |
|
| - |
|
| 263,126 |
|
| Inventories | | |
| |
|
| 172,709 |
|
| - |
|
| 172,709 |
|
| Current tax assets | | |
| E2 |
|
| - |
|
| 10,471 |
|
| 10,471 |
|
| Other current assets | | |
| E1, E2 |
|
| 27,576 |
|
| (17,112 |
) |
| 10,464 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 470,601 |
|
| (6,641 |
) |
| 463,960 |
|
|
|
| |
| |
| |
| Non-Current Assets | | |
| Capital note of shareholder | | |
| E7 |
|
| 32,770 |
|
| (1,560 |
) |
| 31,210 |
|
| VAT Receivable | | |
| |
|
| 26,170 |
|
| - |
|
| 26,170 |
|
| Property plant and equipment | | |
| E3 |
|
| 299,294 |
|
| (4,485 |
) |
| 294,809 |
|
| Goodwill | | |
| |
|
| 22,338 |
|
| - |
|
| 22,338 |
|
| Other non-current assets | | |
| E3 |
|
| - |
|
| 2,151 |
|
| 2,151 |
|
| Deferred tax assets | | |
| E1, E4 |
|
| 30,788 |
|
| 6,816 |
|
| 37,604 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 411,360 |
|
| 2,922 |
|
| 414,282 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 881,961 |
|
| (3,719 |
) |
| 878,242 |
|
|
|
| |
| |
| |
| Current Liabilities | | |
| Borrowings | | |
| |
|
| 152,856 |
|
| - |
|
| 152,856 |
|
| Trade payables | | |
| |
|
| 204,936 |
|
| - |
|
| 204,936 |
|
| Current tax liabilities | | |
| E2 |
|
| - |
|
| 11,303 |
|
| 11,303 |
|
| Other payables and accrued | | |
| expenses | | |
| E2, E4 |
|
| 58,040 |
|
| (12,249 |
) |
| 45,791 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 415,832 |
|
| (946 |
) |
| 414,886 |
|
|
|
| |
| |
| |
| Non-Current Liabilities | | |
| Employee benefit obligations | | |
| E4 |
|
| - |
|
| 1,799 |
|
| 1,799 |
|
| Deferred tax liabilities | | |
| E3 |
|
| 35,364 |
|
| (572 |
) |
| 34,792 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 35,364 |
|
| 1,227 |
|
| 36,591 |
|
|
|
| |
| |
| |
| | | |
| Capital and reserves | | |
| Issued capital | | |
| |
|
| 259,791 |
|
| - |
|
| 259,791 |
|
| Reserves | | |
| |
|
| (14,469 |
) |
| - |
|
| (14,469 |
) |
| Retained earnings | | |
| |
|
| 185,443 |
|
| (4,000 |
) |
| 181,443 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 430,765 |
|
| (4,000 |
) |
| 426,765 |
|
|
|
| |
| |
| |
| | | |
| |
|
| 881,961 |
|
| (3,719 |
) |
| 878,242 |
|
|
|
| |
| |
| |
H - 29
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
C. |
Reconciliation
of Income Statements from Israeli GAAP to IFRS |
|
|
Three months ended
March 31, 2007
|
Year ended
December 31, 2007
|
|
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of
Transition
to IFRS
|
IFRS
|
|
|
NIS in thousands
|
NIS in thousands
|
|
Note
|
(Unaudited)
|
|
|
|
| |
|
|
|
|
|
|
|
| Revenue |
|
|
| |
|
| 330,190 |
|
| - |
|
| 330,190 |
|
| 1,375,674 |
|
| - |
|
| 1,375,674 |
|
| Cost of sales | | |
| E3, E4, E6 |
|
| 231,054 |
|
| 93 |
|
| 231,147 |
|
| 968,374 |
|
| 220 |
|
| 968,594 |
|
|
|
| |
| |
| |
| |
| |
| |
| Gross profit | | |
| |
|
| 99,136 |
|
| (93 |
) |
| 99,043 |
|
| 407,300 |
|
| (220 |
) |
| 407,080 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating costs and | | |
| expenses | | |
| Selling expenses | | |
| E4 |
|
| 71,654 |
|
| (38 |
) |
| 71,616 |
|
| 279,868 |
|
| 33 |
|
| 279,901 |
|
| General and | | |
| administrative expenses | | |
| E4 |
|
| 18,487 |
|
| (24 |
) |
| 18,463 |
|
| 65,710 |
|
| 19 |
|
| 65,729 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating profit | | |
| |
|
| 8,995 |
|
| (31 |
) |
| 8,964 |
|
| 61,722 |
|
| (272 |
) |
| 61,450 |
|
| | | |
| Finance expenses | | |
| E5 |
|
| (7,542 |
) |
| (481 |
) |
| (8,023 |
) |
| (29,097 |
) |
| (230 |
) |
| (29,327 |
) |
| Finance income | | |
| E5, E7 |
|
| - |
|
| 871 |
|
| 871 |
|
| - |
|
| 1,790 |
|
| 1,790 |
|
| | | |
| Other income | | |
| (expenses), net | | |
| E6 |
|
| (224 |
) |
| 224 |
|
| - |
|
| 5 |
|
| (5 |
) |
| - |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit before tax | | |
| |
|
| 1,229 |
|
| 583 |
|
| 1,812 |
|
| 32,630 |
|
| 1,283 |
|
| 33,913 |
|
| | | |
| Income tax charge | | |
| |
|
| (22,380 |
) |
| (44 |
) |
| (22,424 |
) |
| (64,615 |
) |
| 70 |
|
| (64,545 |
) |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Profit (loss) for the | | |
| period | | |
| |
|
| (21,151 |
) |
| 539 |
|
| (20,612 |
) |
| (31,985 |
) |
| 1,353 |
|
| (30,632 |
) |
|
|
| |
| |
| |
| |
| |
| |
H - 30
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
D. |
Capital
and Reserves Reconciliation |
|
|
Share
capital
|
Capital
reserves
|
Foreign
currency
translation
reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended March 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (unaudited) | | |
| | | |
| Israeli GAAP | | |
| |
|
| 29,638 |
|
| 235,608 |
|
| (15,589 |
) |
| (202 |
) |
| 158,837 |
|
| 408,292 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Effect of Transition to IFRS: | | |
| Employee benefits net of tax effects | | |
| E4 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (504 |
) |
| (504 |
) |
| Amortization of pre-paid expenses in respect of | | |
| lease of land | | |
| E3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,787 |
) |
| (1,787 |
) |
| Movement in capital note revaluation reserve | | |
| E7 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,170 |
) |
| (1,170 |
) |
|
|
| |
| |
| |
| |
| |
| |
| Under IFRS rules | | |
| |
|
| 29,638 |
|
| 235,608 |
|
| (15,589 |
) |
| (202 |
) |
| 155,376 |
|
| 404,831 |
|
|
|
| |
| |
| |
| |
| |
| |
H - 31
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
D. |
Capital
and Reserves Reconciliation |
|
|
Share capital
|
Capital
reserves
|
Foreign
currency
translation
reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Year ended December 31, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | | |
| Israeli GAAP | | |
| |
|
| 29,638 |
|
| 235,608 |
|
| (6,757 |
) |
| (1,349 |
) |
| 148,003 |
|
| 405,143 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Effect of Transition to IFRS: | | |
| Employee benefits net of tax effects | | |
| E4 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (787 |
) |
| (787 |
) |
| Amortization of pre-paid expenses in respect of | | |
| lease of land | | |
| E3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,860 |
) |
| (1,860 |
) |
| Movement in capital note revaluation reserve | | |
| E7 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,560 |
) |
| (1,560 |
) |
|
|
| |
| |
| |
| |
| |
| |
| Under IFRS rules | | |
| |
|
| 29,638 |
|
| 235,608 |
|
| (6,757 |
) |
| (1,349 |
) |
| 143,796 |
|
| 400,936 |
|
|
|
| |
| |
| |
| |
| |
| |
H - 32
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
D. |
Capital
and Reserves Reconciliation (Cont.) |
|
|
Share
capital
|
Capital
reserves
|
Foreign
currency
translation
reserve
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2007 |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | | |
| Israeli GAAP | | |
| |
|
| 29,638 |
|
| 230,153 |
|
| (14,393 |
) |
| (76 |
) |
| 185,443 |
|
| 430,765 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Effect of Transition to IFRS: | | |
| Employee benefits net of tax effects | | |
| E4 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (678 |
) |
| (678 |
) |
| Amortization of pre-paid expenses in respect of | | |
| lease of land | | |
| E3 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,762 |
) |
| (1,762 |
) |
| Movement in capital note revaluation reserve | | |
| E7 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (1,560 |
) |
| (1,560 |
) |
|
|
| |
| |
| |
| |
| |
| |
| Under IFRS rules | | |
| |
|
| 29,638 |
|
| 230,153 |
|
| (14,393 |
) |
| (76 |
) |
| 181,443 |
|
| 426,765 |
|
|
|
| |
| |
| |
| |
| |
| |
H - 33
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information |
| |
In
accordance with generally accepted accounting principles in Israel, deferred tax assets
or liabilities were classified as current assets or liabilities depending on the
classification of the assets in respect of which they were created. |
| |
Pursuant
to IAS 1, deferred tax assets or liabilities are classified as non-current assets or
liabilities, respectively. |
| |
Consequently,
amounts of NIS 6,641 thousand, NIS 6,282 thousand and NIS 5,770 thousand which were
previously presented under accounts receivable were reclassified to deferred taxes under
non-current taxes as of January 1, 2007, March 31, 2007 and December 31, 2007
respectively. |
| |
In
accordance with generally accepted accounting principles in Israel, current tax assets or
liabilities were classified as other current assets or liabilities. |
| |
Pursuant
to IAS 1, current tax assets or liabilities are classified as separate balance in the
balance sheet. |
| |
Consequently,
amounts of NIS 10,471 thousand, NIS 6,704 thousand and NIS 21,786 thousand which were
previously presented under other current assets were reclassified to current tax assets
as of January 1, 2007, March 31, 2007 and December 31, 2007 respectively. And amounts of
NIS 11,303 thousand, NIS 9,322 thousand and NIS 11,827 thousand which were previously
presented under other current liabilities were reclassified to current tax liabilities as
of January 1, 2007, March 31, 2007 and December 31, 2007 respectively. |
| |
(3) |
Land
leased from the Israel Land Administration |
| |
In
accordance with generally accepted accounting principles in Israel, land leased from the
Israel Land Administration, was classified as property, plant and equipment and included
in the amount of the capitalized leasing fees that were paid. The amount paid was not
depreciated. |
| |
Pursuant
to IAS 17, “Lease”, land lease arrangements, whereunder at the end of the
leasing period, the land is not transferred to the lessor, are classified as operating
lease arrangements. As a result, the Company’s lands in Afula which were leased from
the Israel Land Administration, shall be presented in the Company’s balance sheet as
other non-current assets, and amortized over the remaining period of the lease. |
| |
Consequently,
the Other non-current assets balance in respect of an operating lease increased by NIS
2,151 thousand, NIS 2,119 thousand and by NIS 2,022 thousand and the balance of property,
plant and equipment decreased by NIS 4,485 thousand. The change was partly carried to
retained earnings in the amounts of NIS 1,762 thousand, NIS 1,787 thousand and NIS 1,860
thousand and partly against deferred taxes in the amounts of NIS 572 thousand, NIS 579
thousand and NIS 603 thousand on January 1, 2007, March 31, 2007 and on December 31,
2007, respectively. |
H - 34
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
In
accordance with generally accepted accounting principles in Israel, the Company’s
liability for severance pay is calculated based on the recent salary of the employee
multiplied by the number of years of employment. |
| |
Pursuant
to IAS 19, the provision for severance pay is calculated according to an actuarial basis
taking into account the anticipated duration of employment, the value of time, the
expected salary increases until retirement and the possible retirement under conditions
not entitling severance pay. |
| |
In
addition, under Israeli GAAP, deposits made with regular policies or directors’insurance
policies which are not in the employee’s name, but in the name of the employer, were
also deducted from the company’s liability. |
| |
Under
IFRS, regular policies or directors’ insurance policies as aforesaid, which do not
meet the definition of plan assets under IAS 19, will be presented in the balance sheet
under a separate item and will not be deducted from the employer’s liability. |
| |
Most
of the Group’s employees are covered according to Section 14 of the Compensation
Law. Employee deposits are not reflected in the Company’s financial statements and
accordingly, no provision is necessary in the books. However,
the Company is required to pay employees differences from entitlement to severance pay
and unutilized vacation pay. These liabilities are computed in accordance with the actuary’s
assessment based on an estimate of their utilization and redemption. |
| |
In
addition, net liabilities in respect of benefits to employees after retirement, which
relate to defined benefit plans, are measured based on actuarial estimates and discounted
amounts. |
| |
The
impact of the aforesaid on the balance sheet is decrease in other payables and accrued
expenses due to unutilized vacation pay in the amounts of NIS 946 thousand, NIS 862
thousand and NIS 898 thousand and an increase in respect of employee benefit obligation
in the amounts of NIS 1,799 thousand, NIS 1,490 thousand and NIS 1,899 thousand as of
January 1, 2007, March 31, 2007 and December 31, 2007, respectively, |
| |
The
change was partly carried to retained earnings in the amounts of NIS 678 thousand, NIS
504 thousand and NIS 787 thousand and partly against deferred taxes in the amounts of NIS
175 thousand, NIS 124 thousand and NIS 214 thousand on January 1, 2007, March 31, 2007
and on December 31, 2007, respectively. |
H - 35
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
E. |
Additional
information (Cont.) |
| |
(5) |
Financial
Income and Expenses |
| |
In
accordance with generally accepted accounting principles in Israel, financing income and
expenses are presented under the statement of income in one amount. |
| |
Pursuant
to IAS 1, financing income and expenses should be presented separately. |
| |
Consequently,
financing expenses in the amounts of NIS 8,413 thousand and NIS 30,887 thousand and
financing income in the amounts of NIS 871 thousand and NIS 1,790 thousand were presented
in the income statements for the three moths ended March 31, 2007 and the year ended
December 31, 2007 respectively. |
| |
(6) |
Other
Income and Expenses |
| |
In
accordance with generally accepted accounting principles in Israel, other income and
expenses are presented in the income statements after the Operating profit. |
| |
Pursuant
to IAS 1, other income and expenses should be presented as a part of Gross profit or /
and as a part of Operating costs and expenses.
Consequently, other expenses in the
amounts of NIS 224 thousand and other income in the amounts of NIS 5 thousand were
classified as cost of sales in the income statements for the three moths ended March 31,
2007 and the year ended December 31, 2007 respectively. |
| |
(7) |
Capital
note of shareholder |
| |
In
accordance with generally accepted accounting principles in Israel, the capital note to
AIPM was stated at nominal value and not capitalized.
Pursuant to IAS 32 and IAS 39 the
capital note to AIPM is considered financial asset and need to be measured at amortized
cost using the effective interest method, less any impairment. |
| |
Consequently,
the capital note balance decreased by NIS 1,560 thousand, NIS 1,170 thousand and NIS
1,560 thousand as of January 1, 2007, March 31, 2007 and December 31, 2007, respectively.
The retained earnings decreased in the same amounts respectively. Finance income was
increased in the amounts of NIS 390 thousand and NIS 1,560 thousand for the three months
period ended March 31, 2007 and for the year ended December 31, 2007 respectively. |
| |
F. |
Reliefs
with respect to the retroactive implementation of IFRS adopted by the Company |
| |
IFRS
1 includes several reliefs, in respect of which the mandatory retroactive implementation
does not apply. The Company elected to adopt in its opening balance sheet under IFRS as
of January 1, 2007 (hereinafter: “the opening balance sheet”) the reliefs with
regards to: |
H - 36
HOGLA-KIMBERLY LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS AS OF MARCH 31, 2008
| NOTE 7 |
– |
DISCLOSURE REGARDING THE ADOPTION OF IFRS (Cont.) |
| |
F. |
Reliefs
with respect to the retroactive implementation of IFRS adopted by the Company
(Cont.) |
| |
(1) |
Business
Combinations, in accordance to the relief, the Company chose not to
retroactively implement the provisions of IFRS 3 regarding to business
combination which occurred before January 1, 2007. |
| |
Consequently
goodwill and adjustments due to fair value of subsidiaries that where acquired before
January 1, 2007 is treated in accordance to generally accepted accounting principles in
Israel. |
| |
(2) |
IFRS
1 allows to measure fixed assets, as of the transition date, or before it,
based on revaluation that was carried out in accordance to prior accounting
principles, as deemed cost, on the time of the revaluation, if the revaluation
was comparable in general, to the cost or to the cost net of accumulated
depreciation according to the IFRS standards, adjusted to changes such as
changes in the CPI. |
| |
Until
December 31, 2003 the Company adjusted its financial statements to the changes in foreign
rate of the U.S dollar, in accordance with opinion No. 36 of the institute of Certified
Accountancy in Israel. |
| |
For
the purpose of adapting the IFRS standards, the Company chose to implement the above said
relief allowed under IFRS 1, and to measure fixed assets items that were purchased or
established up to December 31, 2003 according to the affective cost for that date, based
on their adjusted value to the foreign exchange rate of the U.S dollar up to that date. |
H - 37
Exhibit 6
CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARY
INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
(UNAUDITED)
CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARY
INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2008
UNAUDITED
IN NIS
INDEX
 |
Kost Forer Gabbay & Kasierer
2 Pal-Yam Ave.
Haifa 33095, Israel
Tel: 972 (4)8654000
Fax: 972 (3)5633443
www.ey.com.il |
The Board of Directors
Carmel Container Systems
Ltd.
| Re: |
Review
report of unaudited interim consolidated financial statements
as of and for the three
months ended March 31, 2008 |
At your request, we have reviewed the
accompanying interim consolidated balance sheet of Carmel Container Systems Ltd.
(“the Company”) as of March 31, 2008, and the related interim consolidated
statements of operations, changes in shareholders’ equity and cash flows for the
three months then ended. Our review was made in accordance with procedures established by
the Institute of Certified Public Accountants in Israel. These procedures included reading
the above mentioned interim consolidated financial statements, reading minutes of meetings
of the shareholders and of the board of directors and its committees, and making inquiries
of persons responsible for financial and accounting matters.
A review is substantially less in
scope than an audit in accordance with generally accepted auditing standards in Israel,
and accordingly, we do not express an opinion on the interim consolidated financial
statements.
Based on our review, we are not aware
of any material modifications that should be made to the interim consolidated financial
statements in order for them to be in accordance with International financial standard IAS
34, “Interim Financial Reporting”, and with the Israeli Securities Regulations
(Periodic and Immediate Reports), 1970.
|
|
|
|
|
|
|
|
|
|
| Haifa, Israel |
KOST FORER GABBAY & KASIERER |
| May 5, 2008 |
A Member of Ernst & Young Global |
C - 2
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
Convenience
translation
(Note 3)
|
|
December 31,
2007
|
March 31,
|
March 31,
2008
|
|
2007
|
2008
|
|
Audited
|
Unaudited
|
Unaudited
|
|
N I S
|
U.S. dollars
|
|
(In thousands)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
| |
|
| |
|
| |
|
| |
|
| | | |
| CURRENT ASSETS: | | |
| Cash and cash equivalents | | |
| 2,522 |
|
| 1,743 |
|
| 1,229 |
|
| 346 |
|
| Trade receivables | | |
| 185,153 |
|
| 182,409 |
|
| 180,205 |
|
| 50,719 |
|
| Other accounts receivable and prepaid | | |
| expenses | | |
| 2,546 |
|
| 3,084 |
|
| 2,571 |
|
| 724 |
|
| Inventories | | |
| 55,149 |
|
| 64,670 |
|
| 63,739 |
|
| 17,939 |
|
|
| |
| |
| |
| |
| | | |
| Total current assets | | |
| 245,370 |
|
| 251,906 |
|
| 247,744 |
|
| 69,728 |
|
|
| |
| |
| |
| |
| | | |
| NON CURRENT ASSETS | | |
| Long term receivables | | |
| 141 |
|
| 270 |
|
| 1,847 |
|
| 520 |
|
| Assets in respect of employee benefits | | |
| 623 |
|
| 801 |
|
| - |
|
| - |
|
| Investment in associated company | | |
| 8,651 |
|
| 8,697 |
|
| 8,809 |
|
| 2,479 |
|
| Property and equipment, net | | |
| 72,454 |
|
| 82,071 |
|
| 69,658 |
|
| 19,605 |
|
| Intangible assets, net (see Note 6) | | |
| 2,127 |
|
| 2,127 |
|
| - |
|
| - |
|
|
| |
| |
| |
| |
| | | |
| Total non - current assets | | |
| 83,996 |
|
| 93,966 |
|
| 80,314 |
|
| 22,604 |
|
|
| |
| |
| |
| |
| | | |
| Total assets | | |
| 329,366 |
|
| 345,872 |
|
| 328,058 |
|
| 92,332 |
|
|
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 3
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
Convenience
translation
(Note 3)
|
|
December 31,
2007
|
March 31,
|
March 31,
2008
|
|
2007
|
2008
|
|
Audited
|
Unaudited
|
Unaudited
|
|
N I S
|
U.S. dollars
|
|
(In thousands)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| |
|
| |
|
| |
|
| |
|
| | | |
| CURRENT LIABILITIES: | | |
| Short-term credit from banks and others | | |
| 16,903 |
|
| 8,978 |
|
| 11,943 |
|
| 3,361 |
|
| Current maturities of long-term loans | | |
| 25,602 |
|
| 25,443 |
|
| 24,295 |
|
| 6,838 |
|
| Trade payables | | |
| 87,423 |
|
| 91,984 |
|
| 93,785 |
|
| 26,396 |
|
| Derivative financial instruments | | |
| 537 |
|
| - |
|
| 11,246 |
|
| 3,165 |
|
| Provision for Tax | | |
| 3,993 |
|
| - |
|
| 4,222 |
|
| 1,188 |
|
| Other accounts payable and accrued expenses | | |
| 17,190 |
|
| 15,485 |
|
| 19,279 |
|
| 5,426 |
|
|
| |
| |
| |
| |
| | | |
| Total current liabilities | | |
| 151,648 |
|
| 141,890 |
|
| 164,770 |
|
| 46,374 |
|
|
| |
| |
| |
| |
| | | |
| NON - CURRENT LIABILITIES: | | |
| Long-term liabilities from banks | | |
| 49,376 |
|
| 56,487 |
|
| 44,010 |
|
| 12,387 |
|
| Liabilities in respect of employee benefits, net | | |
| - |
|
| - |
|
| 146 |
|
| 41 |
|
| Deferred income taxes, net | | |
| 6,959 |
|
| 9,296 |
|
| 4,125 |
|
| 1,161 |
|
|
| |
| |
| |
| |
| | | |
| Total non - current liabilities | | |
| 56,335 |
|
| 65,783 |
|
| 48,281 |
|
| 13,589 |
|
|
| |
| |
| |
| |
| | | |
| SHAREHOLDERS' EQUITY ATTRIBUTABLE TO | | |
| EQUITY HOLDERS OF THE PARENT | | |
| Share capital | | |
| 23,716 |
|
| 23,716 |
|
| 23,716 |
|
| 6,675 |
|
| Treasury shares | | |
| (27,565 |
) |
| (4,258 |
) |
| (27,565 |
) |
| (7,758 |
) |
| Share premium | | |
| 45,413 |
|
| 45,413 |
|
| 45,413 |
|
| 12,782 |
|
| Retained earnings | | |
| 80,211 |
|
| 73,328 |
|
| 81,653 |
|
| 22,982 |
|
| Other capital reserves | | |
| (392 |
) |
| - |
|
| (8,210 |
) |
| (2,312 |
) |
|
| |
| |
| |
| |
| | | |
| Total shareholders' equity | | |
| 121,383 |
|
| 138,199 |
|
| 115,007 |
|
| 32,369 |
|
|
| |
| |
| |
| |
| | | |
| Total liabilities and shareholders' equity | | |
| 329,336 |
|
| 345,872 |
|
| 328,058 |
|
| 92,332 |
|
|
| |
| |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| May 5, 2008 |
|
|
|
|
|
|
|
|
|
| Date of approval of |
Menachem Kalach |
Zvika Livnat |
Doron Kempler |
Jacob Konkol |
| the financial |
Director |
Vice Chairman of the |
General Manager |
Chief Financial |
| statements |
|
Broad of Directors |
|
Officer |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 4
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
Convenience
Translation
(Note 3)
|
|
Year ended
December 31,
2007
|
Three months ended
March 31,
|
Three months
ended
March 31,
2008
|
|
2007
|
2008
|
|
Audited
|
Unaudited
|
Unaudited
|
|
N I S
|
U.S. dollars
|
|
(In thousands, except share and per share amounts)
|
| |
|
|
|
|
| Revenues |
|
|
| 471,428 |
|
| 121,937 |
|
| 116,978 |
|
| 32,924 |
|
| Cost of revenues | | |
| 417,469 |
|
| 110,295 |
|
| 104,024 |
|
| 29,278 |
|
|
| |
| |
| |
| |
| | | |
| Gross profit | | |
| 53,959 |
|
| 11,642 |
|
| 12,954 |
|
| 3,646 |
|
|
| |
| |
| |
| |
| | | |
| Selling and marketing expenses | | |
| 24,185 |
|
| 6,659 |
|
| 6,193 |
|
| 1,743 |
|
| General and administrative expenses | | |
| 16,621 |
|
| 4,042 |
|
| 5,222 |
|
| 1,470 |
|
| Other expenses (income) | | |
| (102 |
) |
| - |
|
| 329 |
|
| 92 |
|
|
| |
| |
| |
| |
| | | |
| Operating income | | |
| 13,255 |
|
| 941 |
|
| 1,210 |
|
| 341 |
|
|
| |
| |
| |
| |
| | | |
| Capital gain from sale of fixed assets | | |
| 235 |
|
| 40 |
|
| 41 |
|
| 12 |
|
| Financial income | | |
| 1,783 |
|
| 409 |
|
| 1,847 |
|
| 520 |
|
| Financial expenses | | |
| (6,112 |
) |
| (959 |
) |
| (1,529 |
) |
| (431 |
) |
| Equity in (losses) earnings of an associated company | | |
| (80 |
) |
| (34 |
) |
| 158 |
|
| 44 |
|
|
| |
| |
| |
| |
| | | |
| Income before taxes on income | | |
| 9,081 |
|
| 397 |
|
| 1,727 |
|
| 486 |
|
| Taxes on income (tax benefit) | | |
| 1,741 |
|
| (60 |
) |
| 285 |
|
| 80 |
|
|
| |
| |
| |
| |
| | | |
| Income after taxes on income | | |
| 7,340 |
|
| 457 |
|
| 1,442 |
|
| 406 |
|
|
| |
| |
| |
| |
| | | |
| Net income | | |
| 7,340 |
|
| 457 |
|
| 1,442 |
|
| 406 |
|
|
| |
| |
| |
| |
| | | |
| Net income (loss) per NIS 1 par value of shares | | |
| attributable to equity holders of the parent | | |
| 3.63 |
|
| 0.19 |
|
| 0.83 |
|
| 0.23 |
|
|
| |
| |
| |
| |
| | | |
| Weighted average number of shares outstanding during | | |
| the period (in thousands) | | |
| 2,022 |
|
| 2,400 |
|
| 1,740 |
|
| 1,740 |
|
|
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 5
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| STATEMENTS OF CHANGES IN SHARHOLDERS' EQUITY |
|
|
Three months ended March 31, 2008
|
|
Share
Capital
|
Share
Premium
|
Other
Capital
reserves
|
Retained
earnings
|
Less-
treasury
shares
|
Total
Shareholders'
Equity
|
|
NIS
|
|
(In thousands)
|
| |
|
|
|
|
|
|
| Balance at the beginning of the period |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (audited) | | |
| 23,716 |
|
| 45,413 |
|
| (392 |
) |
| 80,211 |
|
| (27,565 |
) |
| 121,383 |
|
| Unrealized loss on hedging derivative | | |
| - |
|
| - |
|
| (10,771 |
) |
| - |
|
| - |
|
| (10,771 |
) |
| Tax influence on hedging unrealized loss | | |
| - |
|
| - |
|
| 2,891 |
|
| - |
|
| - |
|
| 2,891 |
|
| Realized loss on hedging derivative | | |
| - |
|
| - |
|
| 62 |
|
| - |
|
| - |
|
| 62 |
|
|
| |
| |
| |
| |
| |
| |
| Total income (expenses) | | |
| - |
|
| - |
|
| (7,818 |
) |
| - |
|
| - |
|
| (7,818 |
) |
| Net income | | |
| - |
|
| - |
|
| - |
|
| 1,442 |
|
| - |
|
| 1,442 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Total expenses | | |
| - |
|
| - |
|
| (7,818 |
) |
| 1,442 |
|
| - |
|
| (6,376 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| Balance at the end of the period | | |
| (unaudited) | | |
| 23,716 |
|
| 45,413 |
|
| (8,210 |
) |
| 81,653 |
|
| (27,565 |
) |
| 115,007 |
|
|
| |
| |
| |
| |
| |
| |
|
Three months ended March 31, 2008
|
|
Share
Capital
|
Share
Premium
|
Other
Capital
reserves
|
Retained
earnings
|
Less-
treasury
shares
|
Total
Shareholders'
Equity
|
|
Convenience translation into U.S. dollars (Note 3)
|
|
(In thousands)
|
| |
|
|
|
|
|
|
| Balance at the beginning of the period |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (audited) | | |
| 6,675 |
|
| 12,782 |
|
| (110 |
) |
| 22,576 |
|
| (7,758 |
) |
| 34,165 |
|
| Unrealized loss on hedging derivative | | |
| - |
|
| - |
|
| (3,033 |
) |
| - |
|
| - |
|
| (3,033 |
) |
| Tax influence on hedging unrealized loss | | |
| - |
|
| - |
|
| 814 |
|
| - |
|
| - |
|
| 814 |
|
| Realized loss on hedging derivative | | |
| - |
|
| - |
|
| 17 |
|
| - |
|
| - |
|
| 17 |
|
|
| |
| |
| |
| |
| |
| |
| Total income (expenses) | | |
| - |
|
| - |
|
| (2,202 |
) |
| - |
|
| - |
|
| (2,202 |
) |
| Net income | | |
| - |
|
| - |
|
| - |
|
| 406 |
|
| - |
|
| 406 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Total expenses | | |
| - |
|
| - |
|
| (2,202 |
) |
| 406 |
|
| - |
|
| (1,796 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| Balance at the end of the period | | |
| (unaudited) | | |
| 6,675 |
|
| 12,782 |
|
| (2,312 |
) |
| 22,982 |
|
| (7,758 |
) |
| 32,369 |
|
|
| |
| |
| |
| |
| |
| |
|
Year ended December 31, 2007
|
|
Share
Capital
|
Share
Premium
|
Other
Capital
reserves
|
Retained
earnings
|
Less-
treasury
shares
|
Total
Shareholders'
Equity
|
|
NIS
|
|
(In thousands)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at the beginning of the year |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (audited) | | |
| 23,716 |
|
| 45,413 |
|
| - |
|
| 72,871 |
|
| (4,258 |
) |
| 137,742 |
|
| Unrealized loss on hedging derivative | | |
| - |
|
| - |
|
| (537 |
) |
| - |
|
| - |
|
| (537 |
) |
| Tax influence on hedging unrealized loss | | |
| - |
|
| - |
|
| 145 |
|
| - |
|
| - |
|
| 145 |
|
|
| |
| |
| |
| |
| |
| |
| Total income (expenses) | | |
| - |
|
| - |
|
| (392 |
) |
| - |
|
| - |
|
| (392 |
) |
| Net income | | |
| - |
|
| - |
|
| - |
|
| 7,340 |
|
| - |
|
| 7,340 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Total Income | | |
| - |
|
| - |
|
| (392 |
) |
| 7,340 |
|
| - |
|
| 6,948 |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Repurchase of company shares | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (23,307 |
) |
| (23,307 |
) |
|
| |
| |
| |
| |
| |
| |
| | | |
| Balance at the end of the year (audited) | | |
| 23,716 |
|
| 45,413 |
|
| (392 |
) |
| 80,211 |
|
| (27,565 |
) |
| 121,383 |
|
|
| |
| |
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 6
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| STATEMENTS OF CHANGES IN SHARHOLDERS' EQUITY |
|
|
Three months ended March 31, 2007
|
|
Share
capital
|
Share
Premium
|
Retained
earnings
|
- Less
treasury
shares
|
Total
shareholders'
Equity
|
|
NIS
|
|
(In thousands)
|
| |
|
|
|
|
|
| Balance at the beginning of the period |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (audited) | | |
| 23,716 |
|
| 45,413 |
|
| 72,871 |
|
| (4,258 |
) |
| 137,742 |
|
| | | |
| Net income | | |
| - |
|
| - |
|
| 457 |
|
| - |
|
| 457 |
|
|
| |
| |
| |
| |
| |
| | | |
| Total Income | | |
| - |
|
| - |
|
| 457 |
|
| - |
|
| 457 |
|
|
| |
| |
| |
| |
| |
| | | |
| Balance at the end of the period | | |
| (unaudited) | | |
| 23,716 |
|
| 45,413 |
|
| 73,328 |
|
| (4,258 |
) |
| 138,199 |
|
|
| |
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 7
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
Convenience
Translation
(Note 3)
|
|
Year ended
December 31,
2007
|
Three months ended
March 31,
|
Three months
ended
March 31,
2008
|
|
2007
|
2008
|
|
Audited
|
Unaudited
|
Unaudited
|
|
N I S
|
U.S. dollars
|
|
(In thousands)
|
| |
|
|
|
|
| Cash flows from operating activities: |
|
|
| |
|
| |
|
| |
|
| |
|
| | | |
| Net income | | |
| 7,340 |
|
| 457 |
|
| 1,442 |
|
| 406 |
|
| Adjustments required to reconcile net income to net | | |
| cash provided by (used in) operating activities: | | |
| Equity in losses (earnings) of an affiliated company | | |
| 80 |
|
| 34 |
|
| (158 |
) |
| (44 |
) |
| Depreciation | | |
| 21,920 |
|
| 4,562 |
|
| 5,433 |
|
| 1,529 |
|
| Deferred income taxes, net | | |
| (2,252 |
) |
| (60 |
) |
| 57 |
|
| 16 |
|
| Liabilities in respect of employee benefits, net | | |
| 949 |
|
| 612 |
|
| 769 |
|
| 216 |
|
| Erosion and Linkage differentials of long-term | | |
| loans from banks | | |
| 710 |
|
| (71 |
) |
| 118 |
|
| 33 |
|
| Capital gain from sale of property and equipment, | | |
| net | | |
| (235 |
) |
| (40 |
) |
| (41 |
) |
| (12 |
) |
| Impairment of intangible assets | | |
| - |
|
| - |
|
| 2,127 |
|
| 599 |
|
| Increase (decrease) in trade receivables | | |
| (24,259 |
) |
| (21,515 |
) |
| 4,948 |
|
| 1,393 |
|
| Increase in long-term receivables | | |
| - |
|
| - |
|
| (1,706 |
) |
| (480 |
) |
| Increase (decrease) in other accounts receivable | | |
| and prepaid expenses | | |
| 545 |
|
| (10 |
) |
| (25 |
) |
| (7 |
) |
| Decrease (increase) in inventories | | |
| 16,776 |
|
| 7,255 |
|
| (8,590 |
) |
| (2,418 |
) |
| Increase (decrease) in trade payables | | |
| (2,105 |
) |
| (1,560 |
) |
| 6,362 |
|
| 1,791 |
|
| Increase in other accounts payable and accrued | | |
| expenses | | |
| 6,611 |
|
| 1,072 |
|
| 2,318 |
|
| 652 |
|
|
| |
| |
| |
| |
| | | |
| Net cash provided by (used in) operating activities | | |
| 26,080 |
|
| (9,264 |
) |
| 13,054 |
|
| 3,674 |
|
|
| |
| |
| |
| |
| | | |
| Cash flows from investing activities: | | |
| | | |
| Purchase of property and equipment | | |
| (9,045 |
) |
| (1,847 |
) |
| (2,648 |
) |
| (746 |
) |
| Proceeds from sale of property and equipment | | |
| 276 |
|
| 40 |
|
| 52 |
|
| 15 |
|
| Refund of long-term loan | | |
| 153 |
|
| 41 |
|
| - |
|
| - |
|
|
| |
| |
| |
| |
| | | |
| Net cash used in investing activities | | |
| (8,616 |
) |
| (1,766 |
) |
| (2,596 |
) |
| (731 |
) |
|
| |
| |
| |
| |
| | | |
| Cash flows from financing activities: | | |
| | | |
| Purchase of equipment with credit | | |
| (4,600 |
) |
| - |
|
| - |
|
| - |
|
| Proceeds from long-term loans from banks | | |
| 29,000 |
|
| 16,000 |
|
| - |
|
| - |
|
| Principal payment of long-term loans from banks | | |
| (27,113 |
) |
| (6,380 |
) |
| (6,791 |
) |
| (1,911 |
) |
| Short-term credit from banks and others, net | | |
| 9,258 |
|
| 1,333 |
|
| (4,960 |
) |
| (1,396 |
) |
| Repurchase of the Company's shares | | |
| (23,307 |
) |
| - |
|
| - |
|
| - |
|
|
| |
| |
| |
| |
| | | |
| Net cash provided by (used in) financing activities | | |
| (16,762 |
) |
| 10,953 |
|
| (11,751 |
) |
| (3,307 |
) |
|
| |
| |
| |
| |
| | | |
| Increase (decrease) in cash and cash equivalents | | |
| 702 |
|
| (77 |
) |
| (1,293 |
) |
| (364 |
) |
| Cash and cash equivalents at the beginning of the | | |
| period | | |
| 1,820 |
|
| 1,820 |
|
| 2,522 |
|
| 710 |
|
|
| |
| |
| |
| |
| | | |
| Cash and cash equivalents at the end of the period | | |
| 2,522 |
|
| 1,743 |
|
| 1,229 |
|
| 346 |
|
|
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 8
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| |
|
|
|
|
Convenience
translation
(Note 3)
|
| |
|
Year ended
December 31,
2007
|
Three months ended
March 31,
|
Three months
ended
March 31,
2008
|
| |
|
2007
|
2008
|
| |
|
Audited
|
Unaudited
|
Unaudited
|
| |
|
N I S
|
U.S. dollars
|
| |
|
(In thousands)
|
| |
|
|
|
|
|
| a. |
Non-cash transactions: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Purchase of property and equipment with credit | | |
| 584 |
|
| - |
|
| - |
|
| - |
|
| |
|
| |
| |
| |
| |
| |
| | |
| b. |
Supplemental disclosure of cash flows activities: | | |
| |
Cash paid during the year for: | | |
| |
Interest | | |
| 5,523 |
|
| 1,223 |
|
| 1,067 |
|
| 300 |
|
| |
|
| |
| |
| |
| |
| |
Income taxes | | |
| 40 |
|
| 20 |
|
| - |
|
| - |
|
| |
|
| |
| |
| |
| |
The accompanying notes are an integral part of the interim consolidated financial statements.
C - 9
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| |
These
financial statements have been prepared for the first time in accordance with
International Financial Reporting Standards (“IFRS”) in a condensed format as
of March
31, 2008 and for the three months then ended (“interim consolidated financial
statements”). With respect to certain notes, such as disclosures regarding
commitments, liabilities, contingent liabilities and such, the interim consolidated
financial statements should be read in conjunction with the Company’s annual
financial statements and accompanying notes as of December 31, 2007, and for the year
then ended, which are the Company’s latest annual financial statements prepared in
accordance with generally accepted accounting principles in Israel (“Israeli GAAP”). |
| |
The
IFRS on the basis of which the accounting policies were determined in the interim
consolidated financial statements are the same IFRS that will be in effect or that may be
adopted early in the first annual financial statements prepared in accordance with IFRS
as of December 31, 2008 and for the year then ended, and are therefore subject to the
relevant changes and their effective adoption in the annual financial statements.
Accordingly, the accounting policies adopted in the annual financial statements, as far
as they are relevant to these interim financial statements, will be definitively
determined upon the preparation of the annual financial statements. |
| |
The
Company first adopted IFRS in 2008 and accordingly, the date of transition to reporting
pursuant to IFRS is January 1, 2007. Prior to the adoption of IFRS, the Company prepared
its financial statements in accordance with Israeli GAAP. The Company’s latest
annual financial statements prepared in accordance with Israeli GAAP were as of December
31, 2007 and for the year then ended. |
| |
See
Note 5 for the reconciliations between reporting pursuant to Israeli GAAP and reporting
pursuant to IFRS. |
| |
The
interim consolidated financial statements have been prepared in accordance with generally
accepted accounting principles for the preparation of financial statements for interim
periods, as prescribed in International Financial Reporting Standard IAS 34 (“Interim
Financial Reporting”) and in accordance with the disclosure requirements of Chapter
D of the Securities Regulations (Periodic and Immediate Reports), 1970. |
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES |
| |
Below
are the significant accounting policies followed by the Company in these financial
statements upon the first-time adoption of IFRS that were consistently applied in all the
presented periods: |
| |
a. |
Basis
of presentation of the financial statements: |
| |
The
Company’s financial statements are prepared on a historical cost basis. |
| |
Consolidation
of the financial statements: |
| |
The
consolidated financial statements include the accounts of companies over which the
Company has control (subsidiaries). Control is fulfilled when the Company has the
ability, directly or indirectly, to outline the financial and operating policy of the
controlled company. When reviewing the control, the effect of the potential voting rights
that are exercisable as of the balance sheet date, is taken into account. The
consolidation of the financial statements commences from the date on which the control
begins until the date the control ceases. |
C - 10
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
a. |
Basis
of presentation of the financial statements (cont.): |
| |
Consolidation
of the financial statements (cont.): |
| |
Significant
inter-company balances and transactions and gains or losses arising from transactions
carried out among the Group companies have been eliminated in full in the consolidated
financial statements. |
| |
The
financial statements of the Company and of the subsidiaries are prepared for identical
dates and periods. The accounting policy in the financial statements of the subsidiaries
was applied consistently and uniformly with the policy applied in the financial
statements of the Company. |
| |
b. |
Functional
and foreign currencies: |
| |
1. |
Functional
and presentation currencies: |
| |
The
financial statements are prepared in New Israeli Shekels (“NIS”), which is the
Company’s functional currency. |
| |
The
functional currency, which is the currency that best reflects the economic environment in
which the Company operates and conducts its transactions, is separately determined for
each Group member, including an associate which is presented at equity, and is used to
measure its financial position and operating results. |
| |
2. |
Foreign
currency transactions: |
| |
Transactions
in foreign currencies are initially recorded at the exchange rate on the date of
transaction. Monetary assets and liabilities denominated in foreign currencies are
translated into NIS at the exchange rates prevailing at balance sheet date. Exchange rate
differences are carried to the income statement. Non-monetary assets and liabilities are
translated into NIS at the exchange rates prevailing on the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currencies are translated at
the exchange rates prevailing on the date fair value is determined. |
| |
The
Company considers all highly liquid investments, including unrestricted short-term bank
deposits purchased with original maturities of three months or less, to be cash
equivalents. |
| |
d. |
Allowance
for doubtful accounts: |
| |
The
allowance for doubtful accounts is principally determined in respect of specific debts
whose collection, in the opinion of the management of the companies, is doubtful, in
addition to a general allowance. Impaired customer debs are written off only after all
reasonable collection efforts have been exhausted. |
C - 11
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
Inventories
are valued at the lower of cost and net realizable value. Net realizable value is the
estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale. Costs incurred in bringing
each product to its present location and condition are accounted for as follows: |
| |
Raw
Materials and goods in transit – using the “first-in, first-out” method.
Supplies and packaging material – on the basis of moving – average cost
Work in
progress and Finished products – on the basis of computed with allocable indirect
manufacturing cost. |
| |
The
Company periodically evaluates the condition and age of inventories and provides for slow
moving inventories accordingly. If in a particular period, production is not at normal
capacity, the cost of inventories does not include fixed overhead costs in excess of
those allocated based on normal capacity. Such unallocated overhead costs are recognized
as an expense in the statement of income in the period in which they are incurred.
Furthermore, cost of inventories does not include abnormal amounts of materials, labor
and other costs resulting from inefficiency. |
| |
f. |
Financial
instruments: |
| |
Financial
assets under the scope of IAS 39 are initially recognized at fair value with the addition
of directly attributable transaction costs, other than investments presented at fair
value with the changes in fair value carried to profit and loss. |
| |
After
initial recognition, the accounting treatment of investments in financial assets is based
on their classification into one of the following groups: |
| |
— |
Financial
assets measured at fair value through profit or loss. |
| |
— |
Held-to-maturity
investments. |
| |
— |
Available-for-sale
financial assets. |
| |
1. |
Financial
assets at fair value through profit or loss: |
| |
Financial
assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition as at fair value through profit and
loss. |
| |
Financial
assets are classified as held for trading if they are acquired for the purpose of selling
or reselling in the near term, if they form part of a portfolio of identifiable financial
instruments that are jointly managed to earn short-term profits or if they are a
derivative not held for hedging purposes. |
| |
Gains
or losses on investments held for trading are recognized in profit and loss. |
C - 12
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
f. |
Financial
instruments (cont.): |
| |
1. |
Financial
assets at fair value through profit or loss: |
| |
Derivatives,
including separated embedded derivatives are also classified as held for trading unless
they are designated as effective hedging instruments or a financial guarantee contract. |
| |
In
the event of a financial instrument that contains one or more embedded derivatives, the
combined instrument in its entirety may be held upon initial recognition as a financial
asset at fair value through profit or loss. |
| |
The
Group assesses whether embedded derivatives are required to be separated from host
contracts when the Group first becomes party to the contract. Reassessment only occurs if
there is a change in the terms of the contract that significantly modifies the cash flows
that would otherwise be required. |
| |
2. |
Derecognition
of financial instruments: |
| |
A
financial asset (such as a receivable in a transaction for the sale of a customer debt)
is derecognized when: |
| |
— |
The
rights to receive cash flows from the asset have expired; |
| |
— |
The
Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass
through’ arrangement; or |
| |
— |
The
Company has transferred its rights to receive cash flows from the asset and either (a)
has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset. |
| |
Where
the Company has transferred its rights to receive cash flows from an asset and has
neither transferred nor retained substantially all the risks and rewards of the asset nor
transferred control of the asset, the asset is recognized to the extent of the Company’s
continuing involvement in the asset. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Company could be
required to repay. |
| |
A
financial liability is derecognized when the obligation under the liability is discharged
or cancelled or expires. |
C - 13
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
f. |
Financial
instruments (cont.): |
| |
2. |
Derecognition
of financial instruments (cont.): |
| |
Financial
liabilities (cont.) |
| |
Where
an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognized in the income statement. If the exchange or modification
is immaterial, it is treated as a change in the terms of the original commitment and no
gain or loss is recognized from the exchange. |
| |
Company
shares held by the Company and subsidiaries are carried at cost and presented as a
deduction from equity. Gains or losses from the purchase, sale, issuance or cancellation
of treasury shares are carried directly to equity. |
| |
g. |
Impairment
of financial assets: |
| |
The
Group assesses at each balance sheet date whether a financial asset or group of financial
assets is impaired. |
| |
Assets
carried at amortized cost: |
| |
If
there is objective evidence that an impairment loss on loans and receivables carried at
amortized cost has been incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash
flows (excluding future expected credit losses that have not been incurred) discounted at
the financial asset’s original effective interest rate (i.e. the effective interest
rate computed at initial recognition). The carrying amount of the asset is reduced
through use of an allowance account. The amount of the loss shall be recognized in profit
or loss. |
| |
h. |
Derivative
financial instruments: |
| |
Any
gains or losses arising from changes in fair value on derivatives during the year that do
not qualify for hedge accounting are taken directly to profit or loss. |
| |
The
Group maintains derivative financial instruments in order to hedge foreign currency and
CPI related risks. Embedded derivatives are separated from the host contract and
accounted for separately if: (a) there is no direct relation between the economic
features and the risks of the host contract and the embedded derivative; (b) a separate
instrument with the same terms as the embedded derivative would have met the definition
of a derivative and (c) the embedded instrument is not measured at fair value through
profit and loss. |
C - 14
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
h. |
Derivative
financial instruments (cont): |
| |
For
the purpose of hedge accounting, hedges are classified as: |
| |
— |
Fair
value hedges when hedging the exposure to changes in the fair value of a recognized asset
or liability or an unrecognized firm commitment (except for foreign currency risk); or |
| |
— |
Cash
flow hedges when hedging exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognized asset or liability or a
highly probable forecast transaction or the foreign currency risk in an unrecognized firm
commitment; or |
| |
— |
Hedges
of a net investment in a foreign operation. |
| |
At
the inception of a hedge relationship, the Group formally designates and documents the
hedge relationship to which the Group wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of
the risk being hedged and how the entity will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the hedged item’s fair value
or cash flows attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in fair value or cash flows and are assessed on
an ongoing basis to determine that they actually have been highly effective throughout
the financial reporting periods for which they were designated. |
| |
The
effective portion of the gain or loss on the hedging instrument is recognized directly in
equity, while any ineffective portion is recognized immediately in profit or loss. |
| |
Amounts
taken to equity are transferred to profit or loss when the hedged transaction affects
profit or loss, such as when the hedged financial income or financial expense is
recognized or when a forecast sale occurs. Where the hedged item is the cost of a
non-financial asset or non-financial liability, the amounts taken to equity are
transferred to the initial carrying amount of the non-financial asset or liability. |
| |
If
the forecast transaction is no longer expected to occur, amounts previously recognized in
equity are transferred to profit or loss. If the hedging instrument expires or is sold,
terminated or exercised without replacement or rollover, or if its designation as a hedge
is revoked, amounts previously recognized in equity remain in equity until the forecast
transaction or firm commitment occurs. |
| |
i. |
Investments
in associated company: |
| |
Associates
are companies in which the Group exercises significant influence over the operating and
financial policies without having control. |
| |
The
investment in an associate is accounted for using the equity method of accounting. Under
the equity method, the investment in the associate is carried in the balance sheet at
cost plus post acquisition changes in the Group’s share of net assets and the
capital reserves of the associate. |
C - 15
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
i. |
Investments
in associated company (cont.): |
| |
The
income statement reflects the share of the results of operations of the associate.
Profits and losses resulting from transactions between the Group and the associate are
eliminated to the extent of the interest in the associate. |
| |
Losses
of associates in amounts which exceed their shareholders’ equity are recognized by
the Company to the extent of its investment in the associates with the addition of any
losses that the Company may incur as a result of a guarantee or other financial support
provided in respect of these associates. |
| |
The
reporting dates of the associate and the Company are identical and the associate’s
accounting policies conform to those used by the Company for like transactions and events
in similar circumstances. |
| |
j. |
Property
and equipment: |
| |
Fixed
assets are stated at cost with the addition of direct acquisition costs, less accumulated
impairment losses, less accumulated depreciation and less investment grants and excluding
day-to-day servicing expenses. Cost includes spare parts and auxiliary equipment that can
be used only in connection with the machinery and equipment |
| |
Depreciation
is calculated on a straight-line basis over the useful life of the assets at annual rates
as follows: |
| |
|
%
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Buildings |
8 |
| |
Machinery and equipment |
6 - 10 (mainly 8%) |
| |
Motor vehicles and forklifts |
15 |
| |
Office furniture and equipment |
6 - 33 |
| |
Leasehold improvements |
over the term of the lease |
| |
Leasehold
improvements are depreciated using the straight-line method over the lease period
(including the extension option held by the Group and intended to be exercised) or based
on the expected life of the assets, whichever is shorter. |
| |
The
residual value and useful life of an asset are tested at least once at year end and the
changes are accounted for as a prospective change in accounting estimate. As for testing
the impairment of fixed assets, see (o) below. |
| |
The
depreciation of the assets is discontinued at the sooner of the date on which the asset
is classified as held for sale and the date on which the asset is derecognized. An asset
is derecognized upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the income statement in the year the asset is derecognized. |
C - 16
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
The
Group’s assets include computer systems comprised of hardware and software. Software
forming an integral part of the hardware to the extent that the hardware cannot function
without the programs installed on it is classified as fixed assets. In contrast,
self-sufficient software licenses that add another dimension of functionality to the
hardware are classified as intangible assets. |
| |
l. |
Impairment
of non-financial assets: |
| |
The
Company assesses at each reporting date whether events or changes in circumstances
indicate that an asset may be impaired. Whenever the carrying amount of an asset exceeds
its recoverable amount, an impairment loss is recognized in income. The recoverable
amount is the higher of an asset’s fair value less costs to sell and its value in
use. In assessing value in use, the estimated future cash flows are discounted using a
pre-tax discount rate that reflects current market assessments specific to the asset. The
recoverable amount of an asset that does not generate independent cash flows is
determined for the income-generating unit of that asset. |
| |
Impairment
losses are carried to the statement of income in other expenses except impairment of
previously revalued property and the revaluation is carried to capital reserve. In such
event, the impairment is carried to capital reserve up to the amount of revaluation and
the balance is carried to the income statement. |
| |
Taxes
on income in the income statement include current and deferred taxes. The tax results in
respect of current or deferred taxes are carried to the income statement other than if
they relate to items that are directly carried to equity. In such cases, the tax effect
is also carried to the relevant item in equity. |
| |
Current
income tax liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by
the balance sheet date. |
| |
2. |
Deferred
income taxes: |
| |
Deferred
taxes are computed in respect of temporary differences between the amounts included in
the financial statements and the amounts allowable for tax purposes, other than a limited
number of exceptions described in the Standard. |
| |
Deferred
tax balances are measured using the enacted tax rates expected to be in effect when these
taxes are carried to the income statement, based on the applicable tax laws at balance
sheet date. The amount for deferred taxes in the statement of income represents the
changes in said balances during the reported year. |
C - 17
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
m. |
Taxes
on income (cont.): |
| |
2. |
Deferred
income taxes: |
| |
Taxes
that would apply in the event of the sale of investments in investees have not been taken
into account in computing the deferred taxes, as long as it is probable that the sale of
the investments is not expected in the foreseeable future. |
| |
Similarly,
deferred taxes that would apply in the event of distribution of earnings by investees as
dividends have not been taken into account in computing the deferred taxes, since the
distribution of dividends does not involve an additional tax liability. |
| |
Deferred
taxes attributed to items carried directly to equity are also carried to equity. |
| |
Deferred
tax assets and deferred tax liabilities are presented as non-current assets and non
current liabilities, respectively. Deferred taxes are offset if there is a legal
enforceable right that allows offsetting a current tax asset against a current tax
liability and the deferred taxes refer to the same taxpayer and the same tax authority. |
| |
n. |
Liabilities
in respect of employee benefits: |
| |
The
Group has several post-employment benefit plans. The plans are usually financed by
deposits in insurance companies and are classified as defined contribution plans and
defined benefit plans. |
| |
1. |
Short-term
employee benefits: |
| |
Short-term
employee benefits include salaries, vacation pay, sick leave, recreation and deposits in
respect of national insurance rights and are presented as expenses as the services are
rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognized
when the Group has a legal or constructive obligation to pay this amount for a past
service rendered by an employee and the amount can be reliably measured. |
| |
2. |
Post-retirement
benefits: |
| |
The
Group has defined contribution plans pursuant to Section 14 to the Severance Pay Law
according to which the Group makes current payments without incurring a legal or
constructive obligation to pay additional amounts, even if adequate amounts did not
accrue in the funds in order to settle all the employee benefits referring to services
rendered by the employees in the current period and in prior periods. Deposits in the
defined contribution plan are recorded as an expense upon the deposit simultaneously with
receiving the employee’s work services and no additional provision is required in
the books. |
C - 18
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
n. |
Liabilities
in respect of employee benefits (cont.): |
| |
2. |
Post-retirement
benefits (cont.): |
| |
The
Group also operates a defined benefit plan in respect of severance pay pursuant to the
Severance Pay Law. According to the Law, employees are entitled to severance pay upon
dismissal or retirement. Severance pay is computed at the employee’s last monthly
salary upon termination of employment multiplied by the number of years of employment. |
| |
The
Company makes current deposits in respect of its severance pay liabilities to certain of
its employees in pension funds and insurance companies (“the plan’s assets”). |
| |
The
cost of severance pay is determined using the projected unit credit method. Actuarial
gains and losses are immediately carried to the income statement as incurred. |
| |
The
liability for severance pay recorded in the balance sheet represents the present value of
the defined benefit obligation less the fair value of the plan’s assets. Assets
arising from this calculation are limited to previous cost of providing services with the
addition of the present value of available funds and amortization of future amounts to be
contributed to the plan. |
| |
Revenue
is recognized to the extent that it is probable that the economic benefits will flow to
the Company, the revenue can be reliably measured and the costs incurred or to be
incurred in respect of the transaction can be reliably measured. Revenue is measured at
the fair value of the consideration received, excluding discounts, rebates and other
sales taxes or duty. |
| |
The
following specific recognition criteria must also be met before revenue is recognized: |
| |
Revenues
from sale of goods: |
| |
Revenue
from the sale of goods is recognized when the significant risks and rewards of ownership
of the goods have passed to the buyer, usually on dispatch of the goods, and the seller
does not maintain continuing managerial involvement. |
| |
Interest
income is recognized on a cumulative basis. |
C - 19
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
o. |
Revenue
recognition (cont): |
| |
Current
customer discounts are recognized in the financial statements upon receipt and are
deducted from sales revenues. |
| |
Customer
discounts given at the end of the year and in respect of which the customer is not
obligated to comply with certain targets, are recognized in the financial statements as
the purchases which entitle the customer to said discounts are made. |
| |
Customer
discounts for which the customer is required to meet certain targets, such as a minimum
amount of annual purchases (either quantitative or monetary), an increase in purchases
compared to previous periods, etc. are recognized in the financial statements in
proportion to the purchases made by the customer during the year that qualify for the
target, provided that it is expected that the targets will be achieved and the amount of
the discount can be reasonably estimated. The estimate as to meeting the targets is
based, among others, on past experience, on the Company’s relationship with the
customers and on the expected amount of purchases by the customers in the remaining
period. |
| |
p. |
Cost
of supplier revenues and discounts: |
| |
Cost
of sales includes expenses for loss, storage and conveyance of inventories to the end
point of sale. Cost of sales also includes impairment losses in respect of inventories,
inventory write offs and provisions for slow-moving inventories. |
| |
Supplier
discounts are deducted from cost of purchase when the conditions entitling to those
discounts are met. Certain of the discounts in respect of that portion of the purchases
that are added to closing inventories are attributed to inventories and the balance
reduces the cost of sales. |
| |
Supplier
discounts received at the end of the year and in respect of which the Company is not
obligated to comply with certain targets, are recognized in the financial statements as
the purchases which entitle the Company to said discounts are made. |
| |
Supplier
discounts for which the Company is required to meet certain targets, such as a minimum
amount of annual purchases (either quantitative or monetary), an increase in purchases
compared to previous periods, etc. are recognized in the financial statements in
proportion to the purchases made by the Company during the year that qualify for the
target, provided that it is expected that the targets will be achieved and the amount of
the discount can be reasonably estimated. The estimate as to meeting the targets is
based, among others, on past experience, on the Company’s relationship with the
suppliers and on the expected amount of purchases from the suppliers in the remaining
period. |
C - 20
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
q. |
Earnings
(loss) per share: |
| |
Earnings
per share are computed according to the number of Ordinary shares. Basic earnings per
share only include shares that were actually outstanding during the period and potential . |
| |
Provisions
are recognized in the balance sheet when the Group has a present legal or constructive
obligation as a result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation. If the effect is
material, provisions are discounted using a current pre-tax interest rate that reflects,
where appropriate, the market’s expectations of the time value of money and in
certain cases, the risks specific to the liability. |
| |
s. |
Disclosure
of the effects of new IFRS in the period prior to their adoption: |
| |
1. |
IFRS
8 – Operating Segments: |
| |
IFRS
8 (“the Standard”) discusses operating segments and replaces IAS 14. The
Standard applies to companies whose securities are listed or undergoing listing for trade
on any securities stock exchange. The Standard will be applicable to annual financial
statements for periods commencing after January 1, 2009. The Standard can be applied
early. The provisions of the Standard will be applied retrospectively, by restatement,
unless the disclosure required is unavailable or impractical to obtain. |
| |
The
Standard determines that an entity will adopt a management approach to segment reporting.
The information reported would be that which management uses internally for evaluating
the performance of operating segments and allocating resources to those segments. |
| |
Furthermore,
disclosure is required regarding revenues deriving from the entity’s products or
services (or from a group of products and similar services), the countries in which these
revenues are derived or the assets or principal customers are located, regardless of
whether management uses this information for making operating decisions. |
| |
The
Company believes that the effect of the new Standard on its current presentation of
segments is not expected to be material. |
C - 21
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (CONT.) |
| |
2. |
IAS
1 (Revised) – Presentation of Financial Statements: |
| |
The
revised IAS 1, “Presentation of Financial Statements”, was issued in September
2007 and becomes effective for financial years beginning on or after January 1, 2009. The
Standard separates owner and non-owner changes in equity. The statement of changes in
equity will include only details of transactions with owners, with all non-owner changes
in equity presented as a single line. In addition, the Standard introduces the statement
of comprehensive income: it presents all items of income and expense recognized in profit
or loss, together will all other items of recognized income and expense, either in one
single statement, or in two liked statements. |
| |
The
effect of the adoption of IAS 1 (Revised) will require the Company to disclose the above
items in the financial statements. |
| |
3. |
IFRS
3 (Revised), “Business Combinations” and IAS 27 (Revised), “Consolidated
and Separate Financial Statements”: |
| |
The
revised Standards were issued in January 2008 and become effective for financial years
beginning on or after July 1, 2009. IFRS 3 (Revised) introduces a number of changes in
the accounting for business combinations that will impact the amount of goodwill
recognized, the reported results in the period that an acquisition occurs, and future
reported results. IAS 27 (Revised) requires that a change in the ownership interest of a
subsidiary is accounted for as an equity transaction. Therefore, such a change will have
no impact on goodwill, nor will it give rise to a gain or loss. |
| |
Furthermore,
the amended standard changes the accounting for losses incurred by the subsidiary as well
as the loss of control of a subsidiary. The changes introduced by IFRS 3 (Revised) and
IAS 27 (Revised) must be applied prospectively and will affect future acquisitions and
transactions with minority interests. |
| |
The
Company estimates that the Standards are not expected to have a material effect on its
financial position, operating results and cash flows. |
| NOTE 3: |
– |
CONVENIENCE TRANSLATION INTO U.S. DOLLARS |
| |
The
financial statements as of March 31, 2008 and for the three months then ended have been
translated into U.S. dollars using the representative exchange rate as of such date ($ 1
= NIS 3.553). The translation was made solely for the convenience of the readers. It
should be noted that the reported New Israel Shekel figures do not necessarily represent
the current costs of the various elements presented, and that the translated US Dollar
figures should not be construed unless otherwise indicated in these statements. |
| NOTE 4: |
– |
OPERATING SEGMENTS DATA |
| |
The
Company operates in two operating segments, the manufacturing of shipping containers,
consumer packaging products and packaging wooden pallets and boxes, (see Note 1a in the
annual financial statements for a brief description of the Company’s business) and
follows the requirements of Accounting Standard No. 11 “Segment Reporting”. |
C - 22
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 4: |
– |
OPERATING SEGMENTS DATA (CONT.) |
| |
|
Year ended December 31, 2007 (audited)
|
| |
|
Shipping
containers
|
Tri-Wall
packaging
wooden
pallets
and boxes
|
Eliminations
|
Total
|
| |
|
NIS
|
| |
|
(In thousands)
|
| |
|
|
|
|
|
| |
Revenues: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Sales to external customers | | |
| 398,089 |
|
| 73,339 |
|
| - |
|
| 471,428 |
|
| |
Intersegment sales | | |
| 8,133 |
|
| 1,981 |
|
| (10,114 |
) |
| - |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Total revenues | | |
| 406,222 |
|
| 75,320 |
|
| (10,114 |
) |
| 471,428 |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Segments operating income | | |
| 8,998 |
|
| 4,257 |
|
| |
|
| 13,255 |
|
| |
|
| |
| |
| |
| |
| |
|
Three months ended March 31, 2007 (unaudited)
|
| |
|
Shipping
containers
|
Tri-Wall
packaging
wooden
pallets
and boxes
|
Eliminations
|
Total
|
| |
|
NIS
|
| |
|
(In thousands)
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Sales to external customers | | |
| 104,470 |
|
| 17,467 |
|
|
|
|
| 121,937 |
|
| |
Intersegment sales | | |
| 1,773 |
|
| 574 |
|
| (2,347 |
) |
| - |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Total revenues | | |
| 106,243 |
|
| 18,041 |
|
| (2,347 |
) |
| 121,937 |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Segments operating income | | |
| 317 |
|
| 624 |
|
| |
|
| 941 |
|
| |
|
| |
| |
| |
| |
| |
|
Three months ended March 31, 2008 (unaudited)
|
| |
|
Shipping
containers
|
Tri-Wall
packaging
wooden
pallets
and boxes
|
Eliminations
|
Total
|
| |
|
NIS
|
| |
|
(In thousands)
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Sales to external customers | | |
| 98,339 |
|
| 18,639 |
|
| |
|
| 116,978 |
|
| |
Intersegment sales | | |
| 1,962 |
|
| 834 |
|
| (2,796 |
) |
| - |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Total revenues | | |
| 100,301 |
|
| 19,473 |
|
| (2,796 |
) |
| 116,978 |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Segments operating income | | |
| 540 |
|
| 670 |
|
| |
|
| 1,210 |
|
| |
|
| |
| |
| |
| |
| |
|
Three months ended March 31, 2008 (unaudited)
|
| |
|
Shipping
containers
|
Tri-Wall
packaging
wooden
pallets
and boxes
|
Eliminations
|
Total
|
| |
|
Convenience translation
|
| |
|
U.S. dollars
|
| |
|
(In thousands)
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Sales to external customers | | |
| 27,677 |
|
| 5,246 |
|
| - |
|
| 32,924 |
|
| |
Intersegment sales | | |
| 552 |
|
| 235 |
|
| (787 |
) |
| - |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Total revenues | | |
| 28,230 |
|
| 5,481 |
|
| (787 |
) |
| 32,924 |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
Segments operating income | | |
| 152 |
|
| 189 |
|
|
|
|
| 341 |
|
| |
|
| |
| |
| |
| |
C - 23
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 5: |
– |
RECONCILIATIONS BETWEEN ISRAELI GAAP AND IFRS |
| |
As
described in Note 2a, these interim financial statements are the Company’s first
interim financial statements prepared in accordance with IFRS. The Company first adopted
IFRS in 2008 and accordingly, the date of transition to reporting pursuant to IFRS is
January 1, 2007. The Company prepared an opening balance sheet as of the date of
transition to IFRS reporting. |
| |
Prior
to the adoption of IFRS, the Company prepared its financial statements in accordance with
Israeli GAAP. The Company’s latest interim financial statements prepared in
accordance with Israeli GAAP were as of September 30, 2007 and for the nine and three
months then ended. The Company’s first annual financial statements prepared in
accordance with IFRS will be for December 31, 2008 and for the year then ended. |
| |
Accordingly,
the Company presents the following reconciliations between the amounts reported under
Israeli GAAP and amounts reported under IFRS as of January 1, 2007 (the transition date
to IFRS reporting), as of December 31, 2007 and for the year then ended, and as of March
31, 2007 and for the three months then ended. |
| |
According
to IFRS 1, the adoption of IFRS in the opening balance sheet as of the transition date is
to be applied retrospectively. |
C - 24
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 5: |
– |
RECONCILIATIONS BETWEEN ISRAELI GAAP AND IFRS (Cont.) |
| |
a. |
Reconciliations
to balance sheets: |
|
|
January 1, 2007
|
March 31, 2007
|
December 31, 2007
|
|
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
|
|
Audited
|
Unaudited
|
Audited
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| CURRENT ASSETS: | | |
| Cash and cash equivalents | | |
| |
|
| 1,820 |
|
| - |
|
| 1,820 |
|
| 1,743 |
|
| - |
|
| 1,743 |
|
| 2,522 |
|
| - |
|
| 2,522 |
|
| Trade receivables | | |
| |
|
| 163,276 |
|
| - |
|
| 163,276 |
|
| 182,409 |
|
| - |
|
| 182,409 |
|
| 185,153 |
|
| - |
|
| 185,153 |
|
| Other accounts receivable | | |
| c |
|
| 3,574 |
|
| (500 |
) |
| 3,074 |
|
| 3,584 |
|
| (500 |
) |
| 3,084 |
|
| 2,546 |
|
| - |
|
| 2,546 |
|
| Inventories | | |
| |
|
| 71,925 |
|
| - |
|
| 71,925 |
|
| 64,170 |
|
| 500 |
|
| 64,670 |
|
| 55,149 |
|
| - |
|
| 55,149 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| Total current assets | | |
| |
|
| 240,595 |
|
| (500 |
) |
| 240,095 |
|
| 251,906 |
|
| - |
|
| 251,906 |
|
| 245,370 |
|
| - |
|
| 245,370 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| NON-CURRENT ASSETS: | | |
| Long term receivables | | |
| |
|
| 311 |
|
| - |
|
| 311 |
|
| 270 |
|
| - |
|
| 270 |
|
| 141 |
|
| - |
|
| 141 |
|
| Severance pay fund, net | | |
| 1d |
|
| 133 |
|
| 1,330 |
|
| 1,463 |
|
| 121 |
|
| 680 |
|
| 801 |
|
| - |
|
| 623 |
|
| 623 |
|
| Investments in affiliated company | | |
| |
|
| 8,368 |
|
| 363 |
|
| 8,731 |
|
| 8,374 |
|
| 323 |
|
| 8,697 |
|
| 8,378 |
|
| 273 |
|
| 8,651 |
|
| Fixed assets, net | | |
| |
|
| 84,916 |
|
| - |
|
| 84,916 |
|
| 82,248 |
|
| (500 |
) |
| 81,748 |
|
| 72,454 |
|
| - |
|
| 72,454 |
|
| Intangible assets | | |
| |
|
| 1,997 |
|
| - |
|
| 1,997 |
|
| 2,450 |
|
| - |
|
| 2,450 |
|
| 2,127 |
|
| - |
|
| 2,127 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Total non current assets | | |
| |
|
| 95,725 |
|
| (807 |
) |
| 97,418 |
|
| 93,463 |
|
| 503 |
|
| 93,966 |
|
| 83,100 |
|
| 896 |
|
| 83,996 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| Total assets | | |
| |
|
| 336,320 |
|
| 1,193 |
|
| 337,513 |
|
| 345,369 |
|
| (503 |
) |
| 345,872 |
|
| 328,470 |
|
| 896 |
|
| 329,366 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| LIABILITIES AND EQUITY | | |
| CURRENT LIABILITIES: | | |
| Credit from banks and others | | |
| |
|
| 31,856 |
|
| - |
|
| 31,856 |
|
| 34,421 |
|
| - |
|
| 34,421 |
|
| 42,505 |
|
| - |
|
| 42,505 |
|
| Trade payables | | |
| |
|
| 93,544 |
|
| - |
|
| 93,544 |
|
| 91,984 |
|
| - |
|
| 91,984 |
|
| 87,423 |
|
| - |
|
| 87,423 |
|
| Other accounts payable | | |
| 3d |
|
| 17,395 |
|
| (550 |
) |
| 16,845 |
|
| 16,085 |
|
| (600 |
) |
| 15,485 |
|
| 17,631 |
|
| (441 |
) |
| 17,190 |
|
| Derivative instruments liabilities | | |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 537 |
|
|
|
|
| 537 |
|
| Provision for Tax | | |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 3,993 |
|
| - |
|
| 3,993 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| Total current liabilities | | |
| |
|
| 142,795 |
|
| (550 |
) |
| 142,245 |
|
| 142,490 |
|
| (600 |
) |
| 141,890 |
|
| 152,089 |
|
| (441 |
) |
| 151,648 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| Long-Term Liabilities | | |
| Long from banks | | |
| |
|
| 48,170 |
|
| - |
|
| 48,170 |
|
| 56,487 |
|
| - |
|
| 56,487 |
|
| 49,376 |
|
| - |
|
| 49,376 |
|
| Liabilities in respect of employee | | |
| benefits, net | | |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
| - |
|
| 298 |
|
| (298 |
) |
| - |
|
| Deferred taxes | | |
| 2d |
|
| 9,336 |
|
| 20 |
|
| 9,356 |
|
| 9,456 |
|
| (160 |
) |
| 9,296 |
|
| 6,614 |
|
| 345 |
|
| 6,959 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Total Long-Term Liabilities | | |
| |
|
| 57,506 |
|
| 20 |
|
| 57,526 |
|
| 65,943 |
|
| (160 |
) |
| 65,783 |
|
| 56,288 |
|
| 47 |
|
| 56,335 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
C - 25
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 5: |
– |
RECONCILIATIONS BETWEEN ISRAELI GAAP AND IFRS (Cont.) |
| |
a. |
Reconciliations
to balance sheets (cont.): |
|
|
January 1, 2007
|
March 31, 2007
|
December 31, 2007
|
|
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
|
|
Audited
|
Unaudited
|
Audited
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EQUITY: |
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| Issued capital | | |
| | |
| 23,716 |
|
| - |
|
| 23,716 |
|
| 23,716 |
|
| - |
|
| 23,716 |
|
| 23,716 |
|
| - |
|
| 23,716 |
|
| Share premium | | |
| | |
| 45,413 |
|
| - |
|
| 45,413 |
|
| 45,413 |
|
| - |
|
| 45,413 |
|
| 45,413 |
|
| - |
|
| 45,413 |
|
| Treasury shares | | |
| | |
| (4,258 |
) |
| - |
|
| (4,258 |
) |
| (4,258 |
) |
| - |
|
| (4,258 |
) |
| (27,565 |
) |
| - |
|
| (27,565 |
) |
| Retained earnings | | |
| | |
| 71,148 |
|
| 1,723 |
|
| 72,871 |
|
| 72,065 |
|
| 1,263 |
|
| 73,328 |
|
| 78,921 |
|
| 1,290 |
|
| 80,211 |
|
| Other capital reserves | | |
| | |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (392 |
) |
| - |
|
| (392 |
) |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| TOTAL EQUITY | | |
| | |
| 136,019 |
|
| 1,723 |
|
| 137,742 |
|
| 136,936 |
|
| 1,263 |
|
| 138,199 |
|
| 120,093 |
|
(*) | 1,290 |
|
| 121,383 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | | |
| Total liabilities and equity | | |
| | |
| 336,320 |
|
| 1,193 |
|
| 337,513 |
|
| 345,369 |
|
| (503 |
) |
| 345,872 |
|
| 328,470 |
|
| 896 |
|
| 329,336 |
|
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
(*) |
Certain
amounts (NIS 1.7M) presented at the reconciliation note in the 2007 financial
statements, were classified to the 12 months ended December 31, 2007 income
regarding employee benefits expenses from affiliated company, instead of
cumulative earnings as of January 1, 2007. The presentation was corrected in
this financial statements. |
C - 26
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 5: |
– |
RECONCILIATIONS BETWEEN ISRAELI GAAP AND IFRS (Cont.) |
| |
b. |
Reconciliations
to profit or loss: |
|
|
Three months ended March 31,2007
|
Year ended December 31, 2007
|
|
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
Israeli
GAAP
|
Effect of
transition
to IFRS
|
IFRS
|
|
|
Unaudited
|
Audited
|
|
Note
|
NIS in thousands
|
| |
|
|
|
|
|
|
|
| Revenues from sales |
|
|
| |
|
| 121,937 |
|
| - |
|
| 121,937 |
|
| 471,428 |
|
| |
|
| 471,428 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Total revenues | | |
| |
|
| 121,937 |
|
| - |
|
| 121,937 |
|
| 471,428 |
|
| |
|
| 471,428 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Cost of sales | | |
| |
|
| 109,695 |
|
| 600 |
|
| 110,295 |
|
| 416,951 |
|
| 518 |
|
| 417,469 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Total cost of sales and services | | |
| |
|
| 109,695 |
|
| 600 |
|
| 110,925 |
|
| 416,951 |
|
| 518 |
|
| 417,469 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Gross profit (loss) | | |
| |
|
| 12,242 |
|
| (600 |
) |
| 11,642 |
|
| 54,477 |
|
| 518 |
|
| 53,959 |
|
| | | |
| Other income | | |
| j |
|
| 40 |
|
| - |
|
| 40 |
|
| - |
|
| 102 |
|
| 102 |
|
| Selling and marketing expenses | | |
| |
|
| 6,659 |
|
| - |
|
| 6,659 |
|
| 24,185 |
|
| - |
|
| 24,185 |
|
| General and administrative expenses | | |
| |
|
| 4,042 |
|
| - |
|
| 4,042 |
|
| 16,621 |
|
| - |
|
| 16,621 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Operating income (loss) | | |
| |
|
| 1,581 |
|
| (600 |
) |
| 981 |
|
| 13,671 |
|
| 620 |
|
| 13,255 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Gain (loss) from sale of fixed assets, net | | |
| |
|
| - |
|
| - |
|
| - |
|
| 337 |
|
| (102 |
) |
| 235 |
|
| Financial income | | |
| f |
|
| - |
|
| (409 |
) |
| (409 |
) |
| - |
|
| (1,783 |
) |
| (1,783 |
) |
| Financial expenses | | |
| |
|
| 550 |
|
| 409 |
|
| 959 |
|
| 4,329 |
|
| 1,783 |
|
| 6,112 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Income (loss) before taxes on income | | |
| |
|
| 1,031 |
|
| (600 |
) |
| 431 |
|
| 9,679 |
|
| (518 |
) |
| 9,161 |
|
| Taxes on income (tax benefit) | | |
| |
|
| 120 |
|
| (180 |
) |
| (60 |
) |
| 1,916 |
|
| (175 |
) |
| 1,741 |
|
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Income (loss) after taxes on income | | |
| |
|
| 911 |
|
| (420 |
) |
| 491 |
|
| 7,763 |
|
| (343 |
) |
| 7,420 |
|
| Equity in earnings (losses) of associates, net | | |
| |
|
| 6 |
|
| (40 |
) |
| (34 |
) |
| 10 |
|
| (90 |
) |
| (80 |
) |
|
|
| |
| |
| |
| |
| |
| |
| | | |
| Net income (loss) | | |
| |
|
| 917 |
|
| (460 |
) |
| 457 |
|
| 7,773 |
|
| (433 |
) |
| 7,340 |
|
|
|
| |
| |
| |
| |
| |
| |
C - 27
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 5: |
– |
RECONCILIATIONS BETWEEN ISRAELI GAAP AND IFRS (Cont.) |
| |
According
to Israeli GAAP, deferred taxes in a total of approximately NIS 500 thousand were
presented in current assets under other accounts receivable. Upon the transition to IFRS
and according to IAS 12, “Income Taxes”, the balances of deferred taxes are
presented in long-term investments and liabilities, respectively. |
| |
According
to Israeli GAAP, the severance pay liability is measured based on the employee’s
last monthly salary multiplied by the number of employment years at each balance sheet
date using the shut down method and severance pay funds are measured at their redemption
values at each balance sheet date. |
| |
1. |
According
to IAS 19, “Employee Benefits”, the Company’s and
affiliates benefit plan is considered a Defined benefit plan and requires
it to present the severance pay liability on an actuarial basis. The
actuarial calculation takes into consideration future salary increases and
the percentage of employee retirement based on the evaluation of payment
timing. |
| |
The
employee benefit plan assets are measured at fair value. |
| |
The
actuarial Liabilities were based on Governments bonds interest, because the Company
believes that there is no wide market for Concerns’ bonds in Israel. |
| |
The
capitalization interest issue is being examined and it might be decided that the proper
capitalization interest in Israel should be based on Concerns’ bonds. |
| |
If
this decision will be taken the numbers that were calculated and considered in this note
will be effected due to calculations based on higher interest rate. It will cause a
decrease in the actuarial Liabilities in the one hand and increase in the current finance
expenses related to actuarial Liabilities on the other hand. |
| |
2. |
Upon
the transition to IFRS, the balance of accrued severance pay has decreased
by approximately NIS 859 thousand and NIS 1,182 thousand, the
employee benefit and remuneration plan assets have increased by
approximately NIS 1,361 and NIS 388 thousand and the deferred tax
reserve has increased by approximately NIS 560 and NIS 390 thousand
in such a manner that the net difference between the net liability as of
December 31, 2007 and March 31, 2007respectively amounts to a decrease of
approximately NIS 1,660 and NIS 1,180 thousand (net of income taxes
of approximately NIS 560 and NIS 390 thousand). |
| |
3. |
Employees
provision for vacation is differed in IFRS since according to Israeli GAAP
social security cost part of the provision. |
| |
e. |
Financial
income and expenses: |
| |
According
to Israeli GAAP, financial income and expenses, net are presented in the income
statement. According to IFRS, financial should be disclosed separately from financial
expenses in the income statement and accordingly, the Company recorded financial expenses
of approximately NIS 6,112 and NIS 959 thousand and financial income of approximately NIS
1,783 and NIS 409 thousand for the year ended December 31, 2007 and for three months
ended March 31,2007 respectively . |
| |
f. |
According
to ISGAAP all other income are recorded in the net income, whereas in the
IFRS only capital gain should be recorded in the operating income. |
C - 28
| CARMEL CONTAINER
SYSTEMS LTD. AND SUBSIDIARIES |
| |
| NOTES TO CONSLIDATED FINANCIAL STATMENTS |
|
| NOTE 6: |
– |
SUBSEQUENT EVENTS |
| |
a. |
In
April 2008, The Company decided to file a law suit against a certain supplier
as a result of his failure to provide the Company an ERP system. The
Company, based on its legal council opinion, believes that all direct
costs paid to the supplier, in the amount of NIS 1,706 thousands will be
returned in a very high probability, and all indirect costs have decent
chances to be repaid. As a result the Company recorded a long term
receivable in the amount of NIS 1,706 thousands, regarding the direct
amount to be receivable in the low suit, and impairment of intangible
asset in the amount of NIS 2,127 thousands. |
| |
b. |
In
April 2008, as a result of a fire in the Company’s Ashkelon site, 11
machines and inventory burned down completely including the site facility.
The Company estimates the damages in approximately $1.5 million. The
Company is insured against all risks of physical loss or damage. The sum
of all losses or damages includes also any delays penalties element of
loss. The Company’s insurance policy includes a self – participation
in the amount of $ 175 thousands. |
C - 29